Casino & Gaming International: Issue 20 by Casino & Gaming International

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2010 ISSUE 3

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CASINO | POKER | BINGO | NETWORK GAMING | MOBILE

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THOR IS BACK AND THIS TIME HE HAS BROUGHT REINFORCEMENTS. www.microgaming.com

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WELCOME

WRITING ON THE WALL GETS BIGGER Publisher Jamie Kean Email: jamie.kean@casinoandgaming.net Editor Stephen Lawton Email: stephen.lawton@casinoandgaming.net Publishing Services Manager Tracie Birch Email: louisa.bull@casinoandgaming.net Advertising Ray Blunt, Sales Director Email: ray.blunt@casinoandgaming.net Daniel Lewis, Sales Manager Email: daniel.lewis@casinoandgaming.net

Business Development Manager Mike McGlynn Email: mike.mcglynn@casinoandgaming.net

Woodland Place, Hurricane Way Wickford Business Park, Wickford Essex SS11 8YB. United Kingdom Telephone: +44 (0)1268 766 515 Facsimile: +44 (0)1268 766 516 Annual Subscription (4 issues): £107 United Kingdom £117 Europe & Middle East £127 USA & Canada £137 Rest of the World Please make cheques payable to ‘CGI Global Media Limited’ and send to: CGI Global Media Limited, Subscriptions Dept, Woodland Place, Hurricane Way, Wickford Business Park, Wickford, Essex SS11 8YB. United Kingdom. Photography © 2010 CGI Global Media Limited and it’s licensors. All rights reserved. © 2010 CGI Global Media Limited (except where otherwise stated). All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written permission of CGI Global Media Limited. ISBN 190200335 7 www.casinoandgaming.net

here is no lack of either realism or optimism about the online gaming industry's progress across even the most challenging of markets, whether liberalising or liberalised. While it remains a question of when rather than if regulation will eventually become the norm, relative headway is being made. For instance, in quite disparate ways this is clear in two key continents: France's newly created regulator of online gaming, ARJEL, which is gradually licensing operators domestic and international; and the provincial British Columbia Lottery Corporation's (BCLC) licensing of their first online casino operator in Canada, though currently suspended as we go to press. By increments, the writing on the wall is certainly looming larger. Both circumstances, in qualified respects, suggest steadily improving prospects for operators over the longer run: in a key European Union member state, on the one hand, and in a key North American location, on the other. Canada's province of British Columbia (BC) until recently was considered a staunch opponent of gambling, but has begun to break the mould. Government-run through the BC lottery, the online casino PlayNow.com supported by OpenBet's software (UK), is intended to be restricted to its local citizens with the aim of establishing accountability, problem gambling protections and gathering tax revenues, partly to offset the budget deficit. If it all gets going, poker in particular is in the offing next year. The fact the online casino failed on its first day of operation in mid-July because such high player levels were not anticipated causing the servers to be overwhelmed is not, in itself, unheard of. The demand justifies the launch and, assuming data protection concerns that arose as a consequence are nailed by the independent review, to demonstrate from the outset a responsible approach to protecting players, subsequent success in maintaining a trouble-free period of operation should create yet another model case for regulation. Naturally, this all draws attention to the UIGEA antiInternet gambling law across the border. Given there has been selective online gambling growth in BC since 2004, progress should be observed within and outside of North America. The case is compelling in the US where in an April H2 Gambling Capital report, all-in legalised online gambling and betting could create around 32, 000 new jobs and about $94bn (£59bn/€71bn) in economic activity and thereby generate around $57.5bn (£36bn/€43.6bn) in new tax revenue over a five year period. Indeed, such a consideration is increasingly important in the European Union. The Republic of Ireland's Taoiseach Brian Cowen (RTE, 14th May), during the adoption of betting regulations in May, stressed the need to bring all betting operators within the "tax net" since that "will increase revenue, but also because it will mean that those currently not contributing to securing the future of important indigenous industries will now make that contribution." At the same time the opening up of the French gambling market will probably be more far-reaching than generally acknowledged in the European context. Considering the state's control stretched back to the 16th century, the effect of breaking with that ancient monopoly quite understandably meant entering a difficult and cautious period of adjustment. Whatever the initial expectations for attracting operators, there has been a steady granting of licenses, although some consider that has been slow due to high taxes, stringent conditions and a product offer limitation holding some operators back. Even so, this is a dramatic development and evidence suggests from PartyGaming/Bwin, PokerStars, Microgaming, 888 and Partouche to name but a few that a serious business opportunities have yet to emerge. Introducing a wider, legal gambling and betting environment online will inevitably be fraught with concern all-round for a while yet. ARJEL's current intent to enforce actions against a number of non-licensed operators that may cause others to refrain from applying, or cause to pull out of France, clearly indicates ARJEL has bite. But that does not signify draconian measures are to follow; it has to be seen in the context of the underlying economic imperative directing that process. In fact, the lack of a regulatory structure could be seen as a failure to encourage the economic value of the industry, such that governments may be seen as out of step with the times if they criminalise rather than regulate gaming. Governments resisting this trend risk losing out on both the gaming and non-gaming implications of the industry.

Stephen Lawton is Editor of Casino & Gaming International

Casino & Gaming International I 3

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CONTENTS

FEATURES 11

EXPECT WORLD CLASS UNIQUENESS FROM A STORY WELL TOLD BY DAVID PAUL GREEN AND LISA PASSAMONTE

GREEN

SYMBOLISM AND THE ART OF ENTERTAINMENT BY BRYAN HAMLIN

INVISIBLE DYNAMICS OF THE CRAFTED GAMING FLOOR BY SCOTT ALWINE

LEAVING NOTHING TO CHANCE FROM SWITZERLAND TO AFRICA BY FRANK OETJEN

EMBRACING CHANGE: STAYING AHEAD OF THE INNOVATION CURVE BY LEE GREGORY

SINGLE CONTACT, GLOBAL CAPABILITY – DEFINING THE HOSTING HORIZON INTERVIEW WITH PETER WILLIAMS

THINNING THE FOG, BUT OPENING FOR BUSINESS? BY JULIAN HARRIS

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CONTENTS

FEATURES 57

AVOIDING WHIMS TO SEEK LONG TERM GROWTH INTERVIEW WITH FRANÇOIS BRUST

THE EU LANDSCAPE FOR REGULATION AND MARKET POTENTIAL BY GEORGE MANGION

DAVID VERSUS GOLIATH: WHY WE OPPOSE NEW LOCAL LICENSING REGIMES BY SONJA LINDENBERG

THE NEXT ‘BIG CYCLE’ WILL KEEP YOU THINKING ON YOUR FEET INTERVIEW WITH SIMON WESTBURY

THE NEW WORLD IS ABOUT TO COME OF AGE BY CHARLES COHEN

JUDGES COULD LOSE THEIR CLOTHES AND WALK HOME IN A BARREL BY JOE KELLY AND FRANK CATANIA

ELEGANT SOLUTIONS: IS SOURCE CODE TESTING ALONE SUFFICIENT? BY ANDREW BEVERIDGE

COLOUR ATMOSPHERICS AND ITS IMPACT ON PLAYER BEHAVIOUR BY MARK GRIFFITHS Casino & Gaming International I 7

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CASINO DESIGN

EXPECT WORLD CLASS UNIQUENESS FROM A STORY WELL TOLD

BY DAVID PAUL GREEN AND LISA PASSAMONTE GREEN

n this and the following design article concerning the Choctaw Casino Resort, the cooperative endeavour between different elements of the design process and the brief determining that a small town would become the focus of an international scale complex, creates a carefully crafted vision at once sensitively historical yet vitally modern. From concept through to implementation, a lasting, sophisticated gaming venue impresses the senses and offers a story that is both memorably defined and engagingly retold.

he city of Durant, Oklahoma, in the United States, has a population of less than 20,000 people, within a metropolitan area of about 40,000. It is the secondlargest city in the Choctaw Nation, and home to Southeastern Oklahoma State University. Roughly two hours by car from Dallas, Texas, it is considered a ‘rural city.’ You might not expect to find a world class resort and casino in Durant, but you would be wrong. The new Choctaw Casino Resort in Durant invites not just locals, but people in the surrounding area, to enjoy a top-tier gaming experience in their own backyard. The design team, led by WorthGroup Architects, developed the overall project to engage the casino and resort guests with sculptural forms and design elements that tell the project’s origin story through a variety of different materials, architectural forms, effects, colours and natural elements, such as fire, water and light. Bryan Hamlin, vice president of design for WorthGroup Architects and the self-proclaimed ‘dreamer of the project,’ described a detail-oriented design process that went from the overall site and building all the way down to furniture design. “With that comprehensive approach,” Hamlin said, “it really leads to an experience for the guest that has a great consistency of brand and identity.”

CONCEPT: MEETING THE CLIENT’S VISION From the beginning, Hamlin said, the Choctaw Nation – the project’s owner – made it clear they wanted to go far beyond the typical Indian gaming facility, avoiding rustic design clichés, while still integrating Native American elements. “We carefully listen to the vision of the client, and define what the experience will be for guests and patrons,” Hamlin said. “And then we ask what elements of their ancestry they deem Casino & Gaming International I 11

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CASINO DESIGN

>> WE CAREFULLY LISTEN TO THE VISION OF THE CLIENT, AND DEFINE WHAT THE EXPERIENCE WILL BE FOR GUESTS AND PATRONS. AND THEN WE ASK WHAT ELEMENTS OF THEIR ANCESTRY THEY DEEM APPROPRIATE FOR INCORPORATION INTO THE DESIGN. THE DESIGN WAS TO CREATE A CONTEMPORARY RESORT THAT CONTAINED SOME ASPECTS OF CHOCTAW HISTORY. IT IS REALLY DIFFERENT FROM THE GAMING INDUSTRY AS A WHOLE. UNIQUENESS WAS THE KEY. UNEXPECTED ELEMENTS ARE INCLUDED IN EVERY ASPECT OF THIS CASINO FLOOR. – BRYAN HAMLIN >> appropriate for incorporation into the design.” “The design was to create a contemporary resort that contained some aspects of Choctaw history. It is really different from the gaming industry as a whole,” Hamlin said. “Uniqueness was the key. Unexpected elements are included in every aspect of this casino floor.” The surprises begin long before the guests enter the casino: “Interestingly enough,” Hamlin said, “as the project started, the chief’s vision was to create an iconic property, a sculptural element, that would be visible for miles.” LeKathryn Champine, the lead interior designer for WorthGroup Architects on the project, said the success of the design is based on good storytelling. “Typically, we approach projects with a lot of research into the client, their background, the culture and location—its very nature and circumstances. Then, we develop a large concept package for them. As we develop that concept, everything falls into place because it’s based on a story.” For example, Champine said, “When we were doing some of our concept research, we discovered the diamondback rattlesnake was very precious to the tribe, as well as the sacred white buffalo.” So, she said, abstractions of the snake are designed into the building throughout. “Bryan designed the exterior of the building to have the rhythm and flow that the snake makes as it travels through sand or water. And the snake design is found, subtly, in the finishes, light fixtures and fabrics throughout. There is an area called the Diamondback Lounge that, from the casino, actually looks like a curled snake with the central chandelier appearing to be the rattle.” The white buffalo became a key element in the casino’s entry. “We love to consider [Native American architecture] in a very abstract way,” said Champine, “so it doesn’t become a cliché.” “Abstraction,” said Hamlin, was the key to successfully incorporating Native American elements into the design. “Some projects are more literal, this one is not.” “A very important vocabulary was developed by the architect early on, and that was to take Native American icons and translate them into ideas that are not immediately identified as Native American concepts, but are abstracted into a Native American theme. WorthGroup Architects provided a great service to the Choctaw by integrating those ideas into the themes,” said Stewart Zilberberg, director of project planning and development for Lexington Design + Fabrication, the specialist contractor responsible for the fabrication and installation of the specialist architectural features and effects, including the exterior water and fire 12 I Casino & Gaming International

feature, entry pylons, lobby water feature and buffalo, and casino party pit arbors. DESIGN POINTS: SMALL TOWN; WORLD-CLASS At the entrance of the casino, a white buffalo in front of a trilevel water wall ‘comes to life’ at pre-determined times to dynamically present a show choreographed to four distinct and original music pieces. In each show, the water and lighting responds to the music in ways that make this area new and fresh each time guests see it. This design statement was a critical factor to setting the mood for the guest experience. “There is a metamorphic quality to the main lobby,” said Hamlin. “The element of surprise and sophistication is really integrated throughout every aspect of this resort.” “What the Choctaw Nation wanted to do was to say to the guests, ‘You are in a world-class casino, regardless of what city you are in,’” said senior lighting designer Steven Young of Visual Terrain, which designed the feature and exterior lighting for the project, and also provided the music for the main lobby show. “Being from a small town myself, I got it. We never really felt like we were a small town. We were ready and willing to create the very best.” Michael Mahlum, associate principal designer with Visual Terrain, concurs: “It’s in the middle of Oklahoma, and that to me is really inspiring. We were really able to exceed people’s expectations. The difference between the buildings they used to have and this are night and day,” Mahlum said. “The old bingo parlour was a Quonset hut. Now, all of a sudden, there’s this beautiful building, with all sorts of artistic curves to it.” (Quonset is a prefabricated corrugated structure of galvanised steel with a semicircular cross section similar to the Nissen hut). Denis McCubbin, is associate consultant and senior project manager for Nautilus Entertainment Design, which was brought on as the architectural lighting designers and AV consultants, for the architectural lighting within the casino. McCubbin said: “When we started going through some of the areas for fit-and-fixtures, the parameter behind it was to ‘bring nature in,’ without theming the space. The use of stone and natural materials, granite and timber, was used throughout the space to achieve the feel. “The overall project was a very well-blended piece,” said McCubbin. “There is nothing outshining anything else, but when you walk into the space, you feel comfortable. You feel like you’re not being bombarded with everything. You walk into some casinos and it’s ‘bells and whistles’; this one begs you to stay. Behind every door is not a screaming slot

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CASINO DESIGN

machine. [It is possible to] not to feel invaded 100 percent of the time. Even the porte-cochere is a nice, comfortable place to come into.” Hamlin gave partial credit for the comfort level to the unusual layout of the 100,000 sq. ft. gaming floor. “It can be perceived by guests as multiple gaming floors, even though it is in fact continuous,” he said. Additionally, “the geometry of the ceiling was carefully monitored: Some guests may want a quieter experience. Some may want to be in the party pit.” This monitoring, said Hamlin, allowed WorthGroup Architects to control the volume and intimacy of each area by managing “the ceiling height and a great variety of lighting fixtures.” By doing this, Hamlin said, the design is able to defy convention is surprising ways. “I think the most striking element on the casino floor was the introduction of the highstakes area,” Hamlin said. Unlike a typical high stakes area, which is often a closed room with limited visibility in and out, the Choctaw high stakes area is in the middle of the gaming floor. “You can actually see through the entire space, even though it holds 100 gaming positions,” said Hamlin. “We had a lot of fun with the ‘cone of vision’ of the guests and patrons on the gaming floor. We really kind of control the perspective. There’s a little bit of peek-a-boo,” Hamlin added, “A little bit of a ‘what’s around the corner?’ aspect.” TECHNICAL CHALLENGES One challenge of building a world-class resort where one hasn’t been built before is that you encounter new problems

related to the location. While Durant actually has relatively temperate weather on average, that average hides insidious extremes, where the summer high can reach well over 100°F/37.8°C, and the winter low can drop into negative digits. “From an environmental impact standpoint, we had to take that into consideration with the materials we chose,” Zilberberg notes, “because of temperature fluctuations and wind considerations… to be able to sustain a programme on the outside all year long. There’s extreme heat, wind and cold. There’s snow. There’s rain. All of those environmental elements had to come into consideration.” Mahlum concurs, “There were certain parts of the environment that were taken into account. But a lot of it was being driven by what the client wanted. For example, we have all these beautiful LED fixtures lighting the façades, but if it snows, they get covered up, and there’s no heat to melt the snow [because LEDs are cool sources], so you can’t see their affect on the façade. Fortunately, the owner is committed to maintaining the design and dealing with this issue the few times a year it arises.” Another issue when building a resort of this scale, in an area where this type of project hasn’t been attempted, is finding and retaining people with the skills needed to complete the construction, installation and maintenance. Being two hours from a major city is great for a destination resort, but difficult for hiring staff. In the case of Durant, “Typically, any property that takes the leap from being a small casino to being a large one will be

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lacking maintenance infrastructure of a Las Vegas casino,” said Rock Hall, a principal at Technifex, which designed the fire and water features. “Your nearest big city is Dallas, which is two hours away. Luckily in Durant, there is a company called Allison Pools, and they’re able to maintain the water systems. But there is no one local who knows how to maintain the control systems or the fire systems, especially in terms of maintaining advanced technology, such as the redundant safety systems.” Zilberberg agrees that finding a local entity that is both talented and supportive is a key factor for success: “Rodney Allison [of Allison Pools] and his team were eager to learn the dynamic of what we were building. From the beginning, they were involved with the process ... so the owner could have a product that would be long-term operationally friendly. Within that process, there were operations manuals we developed and a training process that is ongoing.” In some cases, it’s not just the construction and maintenance teams that may be difficult to find and train, the owners and general contractor may not have experience with a project of such scale, either. Fortunately for the Choctaw Casino Resort project, the team is unanimous in its praise of the Choctaw Nation and general contractor Flintco. Zilberberg sums it up: “It was not unique, but it’s something that is not often expected. It is important to take the longterm maintenance and operational issues into consideration when considering the development of a world class project. And to Choctaw’s credit, they did. And Flintco did, too.” It doesn’t always go so smoothly. “In the entertainment

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industry,” said Hall, “if your design is truly unique—a first article that’s never been built before—once it’s installed, there is debugging that needs to take place over time: That’s something that general contractors who are used to doing more traditional construction projects are not really familiar with dealing with. So often, they will try to crunch you into a timeframe that is unrealistic. Some of them understand; some don’t.” Proper pre-visualisation presentations, as well as physical mock-ups demonstrating design ideas, can help to avoid such pitfalls. “Our clients don’t speak with the kind of design language we sort of ramble on with,” Hamlin said. “One of the great things about the project was that we have a great rapport with the client. As designers, we exist in this strange world of design, but plans and sections and elevations don’t always make a good deal of sense to our clients. One of the tools we have used is animation. We’ve looked at the design ‘live’ during meetings, to discuss options. [Options] is a keyword in this industry and it has been for years. Maintaining a feel of flexibility is key.” Mahlum says that mock-ups of the nighttime lighting, water and fire features were also vital to ensuring the design team and client were on the same page about what was possible, and how the end result would look and feel. “Ultimately,” said Zilberberg, “what we’ve seen is these resorts have taken their cues from previous projects of great magnitude worldwide: Whether they are in gaming or architectural fields. The [Choctaw] council members are all

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>> A VERY IMPORTANT VOCABULARY WAS DEVELOPED BY THE ARCHITECT EARLY ON, AND THAT WAS TO TAKE NATIVE AMERICAN ICONS AND TRANSLATE THEM INTO IDEAS THAT ARE NOT IMMEDIATELY IDENTIFIED AS NATIVE AMERICAN CONCEPTS, BUT ARE ABSTRACTED INTO A NATIVE AMERICAN THEME. - STEWART ZILBERBERG >> very astute, and very educated in the process. It’s a pleasure to work with clients who are so educated in the process.” Regarding the casino’s impact on the neighbourhood, there are some benefits to being in a somewhat out-of-theway place, Champine said. “It’s not in the middle of the town where residential neighborhoods would have been affected. It’s had such a good effect on the community. It’s created thousands of jobs, and brought prosperity to the region. It also helps that the building—with the different LED effects on the outside—it’s a beautiful, soft light. It’s not a harsh light, or lasers going across the sky.” EXPANSION With the current state of the world economy, developers are wary of going too far, building too much at once. A step-bystep approach is the way things are often being done now, and the Choctaw Casino Resort is no different. “We did create a master plan in 2008,” said Hamlin. “It's a very flexible design. It has the capacity to hold more towers. You can expand in multiple directions, and each of those expansions could be different in nature.” There is no timeline for the expansion; however, Hamlin says, “Its total lifespan is considered, the accessibility, the maintenance. These have to be incorporated at the beginning. Even though we live in a world where remodeling happens quite often, we design for the optimal lifespan.” “There's a lot of experience in there that will carry us into the next phases,” said Mahlum. “What we put in is almost infinitely expandable.” Young agrees, noting that special considerations were given to any potential disruption of the current lighting design caused by expansion or construction. “We have supplied the infrastructure that would allow for expansion, in terms of lighting control,” Young said. “The resort may need more fixtures, etc., but the core control system that provides the backbone will allow for that expansion. “The fixtures we are using are flexible,” he continued. “If something were to change, the fixtures can be relocated and used somewhere else. Usually, a downlight is a downlight: It is secured into place, never to be moved. Here, even the mounting platforms could be easily relocated.” TEAMWORK Perhaps the most critical factor for success, when attempting a resort-scale project in untested territory, is assembling a team of people with the background and knowledge to plan for contingencies, and the experience to react well when the unplanned occurs. “We had a strong team,” said Champine. “We all put our creative energy together and had a great synergy, and designed the whole project as a team.” She credits the entire design team at WorthGroup Architects for being “totally focused on the project.” “Each one of these world-class projects takes on a life of

its own, because they are all very impactful,” said Zilberberg. “The projects and the architects are all providing a unique experience ... and providing their customers a unique experience in the entertainment industry. Each one of these has its own separate challenges, in some cases, ideas that have never been done before. For example, in the case of the fire feature, we combined a significant amount of fire and water, in a way that has never been done before. It’s not just the Disneys and Universals any more that are providing these levels of entertainment globally and regionally.” CGI

DAVID PAUL GREEN AND LISA PASSAMONTE GREEN David Paul Green is a Los Angelesbased writer and information architect. He is president of Monteverdi Creative, Inc., a technical/creative services company providing writing, user interface design, technical documentation and photography services to media and themed entertainment companies. He is the co-author, with Steve Alcorn, of Building a Better Mouse: The Story Of The Electronic Imagineers Who Designed Epcot. Email: info@monteverdicreative.com Lisa Passamonte Green is Chief Creative Officer, and a partner at Visual Terrain, Inc. She is an associate member of the International Association of Lighting Designers, previously served on the Board of Managers with the Los Angeles Section of the Illuminating Engineering Society of North America and served three terms on the International Board of the Themed Entertainment Association. Educated in theatrical lighting design at San Diego State University, she continued her training with Walt Disney Imagineering, creating architectural lighting for themed environments prior to founding Passamonte Lighting Design, Inc. in 1995 and later forming Visual Terrain. Email: lisapg@visualterrain.net Casino & Gaming International I 15

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CASINO DESIGN

SYMBOLISM AND THE ART OF ENTERTAINMENT

BY BRYAN HAMLIN

From concept to fabrication, installation and programming, how the final design vision of a casino resort is turned into reality remains an intense achievement of collaborative endeavour over a demanding timescale. Designers, architects and the casino operator, all draw together the intricacies of the grand plan to create a memorable and functional entertainment experience that makes the total gaming and resort complex a success.

rom the corner of my eye while standing at the hotel reservation desk within the lobby, I detect a subtle change in the space. The background music is fading and a soft glow of blue light is emanating from the centre of the room. Water and music envelop a woven ribbon composition of stainless steel pulsating with vivid colouration, momentarily transporting guests to another place and time. The overture crescendos and the room is still for a moment. An air of wonder permeates the space. Two years prior to this moment, the extraordinary design process began. The Choctaw Nation of Oklahoma had conveyed their interest to us for a stunning entry feature within the lobby of the new $300m expansion project at the Choctaw Casino Resort in Durant, Oklahoma. As the project architect, we began conceptual designs for the resortâ&#x20AC;&#x2122;s architectural identity. The exterior sculptures, along with the arrival sequence, had been in development for four months, and by the initiation of the lobby feature design process in February of 2008, the signature look of the hotel tower had been approved. The 160-foot tower was positioned directly above the area of the lobby designated for the feature. It contains a rhythmic organic movement of curved banding abstracting the path of the western diamondback rattlesnake, which holds great symbolic meaning for the Choctaw Nation. Our team abstracted symbolism throughout the entire project with the lobby feature evolving as the most dynamic example of this unique design approach. The new arrival sequence to the resort was incredibly important to the owner and culminates at the lobby feature. The creation of the feature from design to fabrication, installation and programming would prove both exciting and challenging within the upcoming 20 months. A great

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>> RECALLING A WHITE BUFFALO WALKING ACROSS THE PLAINS OF OKLAHOMA, WE INTRODUCED THE REVISED DESIGN CONCEPT TO THE OWNER IN APRIL 2008. THE LIFE SIZE BUFFALO SCULPTURE ITSELF WAS AN ENTIRELY SEPARATE PROJECT… THE RESULT BECAME A TRUE WORK OF ART WITH 1.2 MILLION GLASS TILES INTERLOCKING TO CREATE A CONTEMPORARY STYLISATION SIGNIFYING THE FUSION OF CHOCTAW HERITAGE AND HISTORY WITH THE PROGRESSIVE FUTURE OF THE PRESENT CHOCTAW NATION. >> collaboration began with the onset of the design process. The project team during the initial concept review stage consisted of Flintco Constructive Solutions – General Contractor for the project; WorthGroup Architects – Project Architect; Nautilus Entertainment Design – Audio Visual Designers; Lexington – Specialty Design & Fabricators; Technifex – Aquatics & Special Effects Design and Engineering; and Visual Terrain – Specialty Lighting Design Consultants. Our team of architects designed the lobby as a sweeping curve with a grand volume to greet guests. The expansive space would eventually sparkle with 10,500 square feet of marble tile flooring, marble accent walls, upholstered columns, glass tile insets and beaded chandeliers -- creating a striking impression. Ceiling heights vary along the articulated floating plane at 20 feet within the overall height of 26 feet. The true drama of the lobby is created by its width. At 35 feet across and with an overall length of 220 feet, the radial space commands a myriad of exciting views and perspectives from its multiple entrances to the porte cochere and the casino floor. At the same time, it created multiple design challenges. During the first two months of the design process, numerous options for the water feature were developed and presented to the owner via animations created in our own animation studio to occupy various locations along the east perimeter of the lobby space. Sculptural content of the feature developed simultaneously with its positioning. Influenced by the undulating bands of the hotel tower above, the early versions of the water feature all rippled in plan and terminated into a bubbling energetic collection pool. The owner found the concept unique, but requested our team explore the addition of a symbolic white buffalo somewhere in the completed design. The incorporation of this iconic element into the final design transformed the entire piece, but this would not be the only major addition to the final experience. Recalling a white buffalo walking across the plains of Oklahoma, we introduced the revised design concept to the owner in April 2008. The life size buffalo sculpture itself was an entirely separate project on which we coordinated with Lexington. The result became a true work of art with 1.2 million glass tiles interlocking to create a contemporary stylisation signifying the fusion of Choctaw heritage and history with the progressive future of the present Choctaw Nation. Upon approval by the owner, the team immediately began developing the final design. By October of 2008, our architectural team had created the final version of the feature. A consensus was reached among the team on the need for a full-scale mockup of a portion of the waterfall at the 18 I Casino & Gaming International

Technifex studios in Valencia, California. “The mockup was pivotal for everyone,” said Lisa Passamonte Green, chief creative officer for Visual Terrain. “It enabled us to show the owner, and all of the team members what we were trying to convey, especially in lighting. We demonstrated the difference between the various lighting fixtures effect on the water, the cost differences relating to the various qualities of light and that not all LED lighting is the same. The mockup was instrumental for that dialogue.” The mockup was a tremendous tool for presenting the aesthetics and conveying the spirit of the piece. Green recalled that the owner was “sold on the idea before, but now understood what those ideas really meant and how their guests were physically going to feel.” After the initial presentation to the owner, the group discussed further design possibilities, including the addition of show content. Until that time, the design had been focused on a beautiful, consistently illuminated waterfall and buffalo sculpture accentuated with sparkling accent lighting and audio content within the lobby that would match that of the adjacent casino floor. But as the owner stood before the waterfall mockup and watched the various lighting tests and colour combinations, their prior interest for a show component peaked and they requested design exploration on how the show could be incorporated into the piece without changing the approved concept. ”We were able to adapt to those changes and the system was conceived so well early on that the show could be supported. The technology was already in place to receive the necessary additional components,” commented Stewart Zilberberg, director of project planning and development for Lexington. He added that the seamless transition to this new character of the piece “is a credit to all of Lexington’s team coming out of the entertainment industry. We are prepared and able to make modifications and adapt to project dynamics.” “The entire project really benefited from the collective history of Technifex, Lexington, and Visual Terrain,” added Green, “The three of us have been working together so long that coordination is not an issue.” The feature evolved into a sophisticated installation possessing what Green called “a million beautiful moments. It could have been just a beautiful wall and a beautiful way to make the space nice and welcoming, but the final design transforms that space into a sense of arrival.” “The most unique aspect is the architectural element WorthGroup created within the piece that gives such a powerful visual impact 24/7,” added Zilberberg. This unique element is a series of three waterfall curtains artfully integrated into the sculpture. Each is 80 feet in length and is

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separated into 5, 16-foot sections, which provide their own individual character and challenges. At 22 feet above the lobby floor, the uppermost waterfall curtain is completely concealed from guests within the ceiling design which greatly added to the difficulty of its installation. The middle and lower waterfall curtains emanating from two beautiful stainless ribbons, also proved challenging. “Trying to design serpentine, curved, rectangular, stainless steel water headers that are fed from below was the first major challenge,” Rock Hall, chairman of Technifex explained. “Add to that, the headers are designed at an angle, we were striving for even water release and wanted the entire water system programmable to music. There are always challenges with a one of a kind feature, but our clients were looking for something totally unique that no one else had attempted.” Water containment was the next major challenge. Technifex had never moved such a large volume of water in close proximity to guests. The upper waterfall curtain is powered by two, 15-horsepower pumps, the middle waterfall curtain by a 20-horsepower pump and the lower waterfall curtain by a 15-horsepower pump. Re-circulating via a 20 horsepower pump, two infinity pools are located at the base of the sculpture. One of the pools is elevated, creating the mirrored water surface under the buffalo sculpture, and the other gracefully contains all the upper waterfalls along the entire 80-foot length of the feature. The total water capacity of the feature is 12,000 gallons with 3,300 gallons per minute

re-circulating. Guest can stand within eight feet of the 20-foot tall waterfall system. “The general rule of thumb is to have a 20-foot splash zone in all directions” Hall said. Such standard proximity limitations would not work within the 35-foot width of the lobby; nor with the vision of guest interaction designed for the completed piece, so the close proximity to the feature was incorporated into the overall layout. The large infinity pool creates the control of the system by providing surface tension of the water flowing over the infinity edge grabbing the waterfalls’ water and pulling it down mitigating the majority of the water mist. Audio levels, generated by the large amounts of falling water, were initially problematic so special splash matting material was incorporated to absorb the unwanted sound within the waterfalls’ termination trench eight feet below the lobby floor. Additional operational noise would be generated by the activation of the waterfall curtains’ pumps. “We wanted to be able to speed up or slow down the water flow in order to create a sweeping motion across the piece as the pumps ramp up and down,” Hall said. This was accomplished through the use of variable frequency drives on all of the waterfall curtains’ submersible pumps. The angled stainless steel ribbons of the two lower waterfall curtains hover in space above the main reflecting pool supported by thin vertical stanchions which create their own sculptural rhythm. This seamless design integration of the water supply feed lines is seen as an integral element and

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appealing addition. According to Rock, a great efficiency was designed into the feature: “By feeding the vertical stanchions directly from the adjacent pumps within the mechanical trench and reducing the amounts of plumbing.” He said: “The result is much more intimate. By working through those engineering difficulties, we were able to create a more visceral experience because you are very close to the water.” As Lexington finalised design, fabrication, and installation detailing with Flintco in the spring of 2009, our team of designers began conceptualising an animated presentation for the owner demonstrating the feature’s show performance. An existing epic music score was selected for the team’s presentation and our own animation department created a simulated lighting control panel for the digital version of the feature wall. Actual timing and transition capacities of the final feature were reviewed by the design team based on mockup results and engineering calculations of the various control systems. We envisioned separate show performances, each with distinct visual characteristics, which would be choreographed to custom soundtracks evoking different emotional responses for guests. Close coordination with Visual Terrain and Nautilus Entertainment Design would guarantee this animated representation depicted the power of the completed lighting and audio system. After two months of development, the first lobby feature show performance was viewed in animation form by the owner in May of 2009. The demonstration was a resounding success and work began on the initial four shows for opening night. Regarding the final design approach of the feature as art and entertainment, Green commented: “It is a more advanced way of thinking of a feature wall. There are many moments and interactions with the piece creating an emotional journey as it arcs and changes throughout the day. There is always a story. It is always a feature within the space whether in actual show mode or transition mode. It is different every time you look at it and that was key in how we approached the lighting design. WorthGroup’s designers had such a strong vision of the piece, it was a great collaboration. The lobby feature wall,” she continued, “is the type of project we love to do because it allows us to tell a story and to engage the viewer into a more immersive experience. If we can get guest to engage with the wall and look at the space differently, that for us is what makes the project exciting.” In October of 2009, conceptual stories were created to launch the composing of the four custom soundtracks being produced for the individual shows, yet the lighting system had to be designed and installed prior to the soundtracks’ completion in January 2010. Green said they developed “a lighting design that was flexible enough to allow us to create the show level the team expected, pushing the system as far as we could and still be realistic about the project schedule.” The design would incorporate a total of 120 linear underwater LED fixtures with 40 under each waterfall curtain. Thirty-seven more underwater LED fixtures encircle the raised infinity pool at the buffalo sculpture. The entire feature wall, including all water, lighting and audio systems is controlled by the same ETC Unison Mosaic Controller choreographing all the exterior features, including the color changing hotel tower, resulting in a comprehensive show experience at the new property. Powerful waterfall compositions within a marble-clad 20 I Casino & Gaming International

opulent lobby presented unique challenges as the feature’s dynamic show sound system was developed. “It’s such a beautiful space, we wanted to incorporate the sound system subtly, tactfully, and with the sensitivity that exists within the entire design of the resort,” said Denis McCubbin, associate consultant and senior project manager for Nautilus Entertainment Design Inc. Integrated into the ceiling design, 12,000 watts power the system of 36 speakers with 7,200 watts dedicated to the six large subwoofers creating a wonderful acoustic quality for guests. On the opening night our team shared vivid memories and perceptions of their work on this valiant effort. According to Zilberberg “The piece establishes global recognition within a regional place. It is a wonderful piece of art. It captures emotion and I am most proud of how the piece is so unique and visually striking,” Hall added: “The transparency of the mechanical and control system is very impressive.” “The feature really grabs people’s attention, draws them to the lobby and enables them to enjoy the space much more,” said Green. She recalled “a sense of wonder and surprise” as guests assembled for the first show performances. But the most memorable moment for her was to see the members of the Choctaw Nation taking photographs in front of the feature. “You could see it on their faces. The entire property is beautiful and fabulous, but they kept returning to the feature wall for photographs. It became the iconic moment for what the property represented.” There is a perceptible change in the lobby’s atmosphere once again. Guests are gathering near the feature wall and the flat screens of the lounge area slowly retract into their wooden consoles. It must be the top of the hour. I feel a great sense of pride as I recall this magnificent journey with the Choctaw Nation and the opportunity to work with leaders in our industry. I lean against a side wall smiling, enjoying others watching the show for the first time. CGI

BRYAN HAMLIN Bryan Hamlin is Vice President of Design and Partner, WorthGroup Architects, with 14 years of design experience in the diversified markets of retail, hospitality, and gaming including 10 years design experience in entertainment lighting to empower his comprehensive project approach. Bryan leads overall project design, from master plan to architecture and interiors. An active sculptor working in natural woods and light sources, he creates custom furniture and contemporary pieces recalling his BA (Hons) in Graphic Design with emphasis in sculpture from Northern Kentucky University. Bryan volunteers time for studio instruction, advisory board membership, and is a critique panelist at local Denver academic design programmes. He is also a panelist for the Interior Design programme at the University of Cincinnati from which he obtained his BSc in Interior Design and his Historic Preservation Certificate.

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INVISIBLE DYNAMICS OF THE CRAFTED GAMING FLOOR

BY SCOTT ALWINE

Operators putting digital at the heart of company strategy â&#x20AC;&#x201C; particularly with server-based gaming â&#x20AC;&#x201C; reap the benefits of its efficient, cost-effectiveness. Following key advances with digital casino terminals and their support platforms, server-based gaming employs advanced and connected technology giving casino operators both control and flexibility. As playersâ&#x20AC;&#x2122; gaming horizons expand and new products create new expectations, so too casinos are adjusting to the growing impact of remote technologies by putting innovation at the heart of business.

uildings that incorporate strategies to conserve resources, operate efficiently and improve the overall indoor environment are becoming the standard. This is especially true in the gaming industry, where the ability to control expenses and customer comfort is critical to the success of the enterprise. Fortunately, many high-performance and sustainable strategies are available to help create an efficient and attractive gaming environment. However, few of these strategies can deliver both and do so cost effectively. Raised access floors can provide sustainable, high-performance benefits, attractively and in a cost effective manner. The result is an environment that actually beats the odds and saves energy in the face of steadily increasing energy costs, while maintaining good indoor air quality (IAQ) and ensuring customer comfort. An access floor is a raised floor system that is comprised of an understructure and welded steel floor panels filled with lightweight cement. The understructure provides positive positioning and lateral retention, ensuring that the floor is soundly supported on all contact points. The 24-inch square floor panels use typical finished floor heights from three inches up to 24 inches on a stable understructure that can also offer a height adjustment leveling device to ensure the floor is level, even when the slab is not. The resulting under floor pathway created by the raised floor panels provides housing for any type of service distribution system, including modular wiring, passive or active zone cabling and heating, ventilation and air-conditioning (HVAC) service. Power-voice-data (PVD) terminations can be fed through the modular floor panels to provide slot machines and other gaming equipment with convenient, flexible access to all of these services.

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At the same time, air diffusers supply fresh cool air from the underfloor plenum directly into the occupied space, providing improved air quality and comfort. PVD terminations and diffusers can be relocated anywhere services are desired as spatial layout or technology needs change. Raised access floors first appeared in the 1960s, providing a pathway to distribute wire and cables to large mainframe computers in data center environments. In the 1970s, as mainframes moved to a more modern design similar to today’s data and call centers, the plenum took on the additional role of supplying conditioned air to cool the equipment housed in these centers. The evolution of the computer main frame to smaller personal computers in the 1980s and 1990s moved computers into the office. With that move came the need for flexibility and accessibility to the power and cable infrastructure feeding the telecommunications systems and computer systems now at each workstation. During this time, a study performed by Ellerbee Beckett for the Government Services Administration (GSA) examined various methods of distributing power and cable to the workstation. The result of the study found that using access flooring with modular power and voice data cabling in conjunction with non-powered furniture systems was the best value for the GSA. So began the evolution of using access flooring in commercial office applications in the United States for flexibility and adaptability purposes, providing owners and tenants with good value and return on their investment. However, it was not until the 21st Century that raised access flooring gained wider acceptance across multiple building sectors. The US Green Building Council’s (USGBC) Leadership in Energy and Environmental Design (LEED) program exposed the benefits of underfloor air distribution

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(UFAD) for improved IAQ, energy performance and comfort. As a result, raised access floors became a popular strategy used in achieving LEED rating, and the flooring system moved into new applications, including schools and libraries. Casinos, too, that attract large numbers of people and rely on gaming equipment with significant cooling and cabling requirements, began to embrace raised access flooring for the many benefits the system offers the gaming industry. Slot machines that typically consume a large portion of a casino’s gaming area bring with them data and power cabling requirements that are easily addressed by a raised access floor. Access floors eliminate the need to embed wiring and cabling within concealed rigid structures such as walls, columns and concrete floors and provide access to wiring and cabling that support power, voice and data quickly and easily, at any location on the floor plate. Simultaneously, this same underfloor wire and cable management solution, including modular plug and play power wiring and zone cabling, provides flexibility, allowing casino owners to respond to equipment layout and technology changes quickly, easily and cost effectively. Adapting to everchanging technologies and constant gaming shifts – as well as updating interior design – does not demand expensive facility investment and construction costs. Flexible and accessible services allow casinos to plan their space around functional requirements rather than be limited by fixed, inflexible spaces, and service changes can be made with minimal disruption to the environment. On-site facility managers can access and/or move wiring and cabling services by simply removing a few panels and sliding the cables to the new desired location. Raised access flooring also offers significant advantages in maintaining control of a casino’s environment by providing improved IAQ and more efficient temperature control for

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maximum occupant comfort. Conventional HVAC systems are designed to force cool air from the ceiling, where it mixes with stale air and moves down to the occupant. In casinos, these ceilings are often high, and the air is filled with smoke, compromising the ability of cool, clean air to make its way down to the occupied zone, typically identified as the space from floor level up to six feet. In a raised access floor that uses UFAD, fresh air enters from the floor, replacing, not mixing with, existing ‘contaminated’, often smoke-filled air, which is carried to the ceiling by natural convection and removed through return outlets, keeping it out of the occupied zone. The floor diffusers supply air at warmer temperatures and low pressure because only the six-foot-high space needs cooling. The static pressure required for an UFAD system is typically .05-inch wg, which is significantly less than the amount of the pressure required to force air through rigid ductwork in an overhead system. As a result, the HVAC system uses less fan energy while the increased supply temperature can expand the use of the economizer. In buildings like casinos, where ceilings can be as high as 12 or even 25 feet, the efficiency of an HVAC system that uses raised access flooring to deliver clean, cool air to the occupied zone becomes even more evident. Working with the natural flow of air maximises acoustic performance and energy efficiency while also providing for the best possible air quality. In addition to energy savings, raised access flooring can contribute to savings associated with construction. In fact, raised access flooring projects have reported reductions in installation costs and faster build times through the elimination of ducts and a reduction in wire and cable drop-down lengths. The floors also install quickly, allowing for opening sooner. Once installed, maintenance and service expenses

associated with a raised access floor are minimal, thanks to accessible, flexible and adaptable services that accommodate any layout changes. But savings do not come at the expense of appearance. Like traditional flooring, access floors offer a variety of finishes, from luxury vinyls to woods, cork, rubber and terrazzo. Traditional high-pressure laminates are also available to create a unique and coordinated look throughout a facility. Essentially, access floors look, feel and function much like a slab, but what lies beneath the floor offers far more benefits than concrete. That’s what mechanical engineers placed their bets on as they designed the HVAC and power systems at FireKeepers Casino in Battle Creek, Michigan. Today, 10 months after the Las Vegas-style casino opened its doors, engineers and casino owners consider themselves winners in the game of casino design. Owned by the Nottawaseppi Huron Band of the Potawatomi Indian tribe and managed by Gaming Entertainment Michigan LLC, a joint venture between Full House Resorts, Inc. and RAM Entertainment LLC, the 236,000-square-foot, $300m FireKeepers Casino features approximately 107,000 square feet of gaming space that includes 2,680 Class III slot machines, 78 tables for blackjack, craps, roulette and baccarat, a 20-table poker room and a 200seat bingo room. In addition to the gaming area, the casino includes five restaurants, the Kabaret nightclub, a sports bar, a lounge and a 2,078-space parking garage. “Guest comfort is one of our highest priorities at FireKeepers,” said Jack DeMik, director of facilities at FireKeepers Casino. “The benefits gained in our HVAC system through the use of raised access flooring allow us to create and maintain a clean, fresh, and comfortable environment for our guests.” Casino & Gaming International I 23

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“One of the first things you notice when you walk into the gaming area is the lack of smoke,” said Bob Lex, director of mechanical engineering at Harwood Engineering Consultants, Ltd., Milwaukee, Wisconsin. “The smokey haze that you typically see in a well-lit casino where smoking is permitted is virtually non-existent, thanks to the underfloor air distribution system in place.” Harwood Engineering worked closely with architectural firm Perez, architectural, engineering and environmental firm DLZ and mechanical contractor John E Green to complete the engineering design and installation at the casino. According to Lex, casino owners charged them with the design of a system that ensured good IAQ and a comfortable environment for casino patrons – one that would effectively address all the ramifications inherent in a facility that accommodates large numbers of smokers. “We had previous casino design experience,” he said, “But that experience did not include the use of a raised access floor with underfloor air distribution.” As his firm researched the charge before them, interest in UFAD increased, and Lex began talking with other facilities that were using the system. “After reviewing all of our options, the decision was made to structure the system fundamentally on UFAD,” Lex continued. “The thought was that for patrons of the casino the area between their feet and their head is the area that we needed to ensure was as fresh, clean and comfortable as possible. Underfloor air made that possible, because air enters near the feet, rises vertically past the head and is vented out of the room well above the heads of patrons. As for cigarette smoke, it, too, rises, so the UFAD system encourages it to flow up and out of the room.” “What’s more, we save energy because we don’t have to worry about conditioning the space above their heads, no matter how high the ceiling is. And we can send that supply air in at a warmer temperature, because, unlike with an overhead system, the air doesn’t have to first mix with the warmer air at the ceiling level before coming down to customers. It’s designed to come in at temperatures between 62 and 65 degrees Fahrenheit as opposed to 50 to 55 degrees in an overhead system.” The underfloor system offers additional savings by using energy recovery wheels that recover roughly ? of the energy that is in the exhaust air. “And because 100 percent of the air that is in the gaming floor is exhausted to the outside, meaning none of the air in the room is recirculated in the building, we actually have all the advantages of 100 percent outside ventilation, but we only have the operating and utility impacts of a system that’s really running at 25 percent outside air and 75 percent recirculation,” Lex continued. “As a result, the casino is comfortable and its systems are performing well. I think it demonstrates that the design is about as effective as you can get and still permit smoking in the building.” Lex also appreciates the flexibility that a raised access floor offers. “The access floor provides a tremendous place to put all the wiring and cabling that is part of the slot system and makes it easy to rearrange the casino floor, which they do with regularity. It makes for a very flexible infrastructure.” According to Lex, approximately 5,000 circular diffusers are located in the gaming floor, which is covered in carpet tiles throughout the gaming area and terrazzo in the casino’s main entrance. “It’s really quite attractive and solid. As you walk around on it, you have no idea that you’re walking on a raised access floor. It’s solid as a rock and able to withstand heavy 24 I Casino & Gaming International

foot traffic, rolling carts and the slot machine loads.” Lex went on to say, “If I get another opportunity to work on a casino, I think I would use the raised access floor and UFAD approach right out of the box. I wouldn’t think twice after seeing how it is performing at FireKeepers.” Lisa Pagano, of FFKR Architects and project architect for the casino at Talking Stick Resort in Scottsdale, Arizona, agrees. Owned by the Salt River Pima-Maricopa Indian community, Casino Arizona features a 240,000-square-foot gaming area with more than 800 slot machines and 100 tables for blackjack, poker and other card games. “This was my first experience with a raised access floor, but not the first for the casino owners, who used it in their McKellips casino,” Pagano said. “We decided to go with the system because of its ability to deal with cigarette smoke. It’s a function of the underfloor system that worked extremely well for us. The other important benefit that the raised access floor offered was the ability to handle the tremendous amount of cabling that is inherent in a gaming area. We were able to run all the cabling associated with the slot machines under the floor.” Pagano also appreciated the speed of the floor’s installation for the ‘fast-track’ project. “It was a large-scale project with many deadlines to meet, and the raised floor system enabled us to keep on schedule. It proved to be a flexible system to work with. Even in those areas where we opted not to use floor diffusers to avoid water entering the plenum, we were able to install wall diffusers and still take advantage of the underfloor air distribution system." Todd Mellott, construction director at Casino Arizona, explains that customer comfort and cable flexibility are an owner’s top priorities. “Our customer comfort is number one and by using a raised floor system we are able to make changes in a timely manner, thus not interrupting the customer for a long period of time.” But, for owners, operating and maintenance costs are also important considerations. “The UFAD system can be more expensive to install, but you will realise energy savings. The operating cost of the UFAD system is less than your traditional HVAC systems, and with the technology of the floor systems nowadays, I would have to say that the maintenance of your UFAD systems is also more cost effective than your traditional HVAC systems. Without a doubt, in future casinos, we would use a raised access floor system in any gaming area.” Talking Stick Resort and FireKeepers are among a growing number of casinos that are incorporating raised access floors in their gaming areas. More and more, after adding up all of the benefits, casino owners are finding that raised access flooring is a sure bet. CGI

SCOTT ALWINE Scott Alwine is the marketing manager for Tate Access Floors Inc, a leading manufacturer of raised floors that facilitate underfloor service distribution (UFSD) systems. He is LEED AP and has eight years' experience in the building products and services industry. For more information about Tate, visit www.tateaccessfloors.com

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ICS|Europe is a new company in the gaming industry specialized in the field of table games. Marco Guldenaar, CEO of the company, has worked in the casino industry for 20 years and he delivers creative input to the company. Julio Araico (Technical Manager) has 25 years of experience in the gaming industry as a computer engineer as well as a developer of Hard and Software. Our motto is “keep it simple”, which means that all our products have to comply to a number of conditions: the equipment needs to be userfriendly, quick and effective, in order to enable the dealers to use the equipment easily and players to understand the concept immediately. The progressive coinless jackpot system is such a user-friendly product. The concept is based on a side-bet unit for life games, such as Poker and Black Jack, with a credit indicator for the player, who participates just by touching a button. In this coinless jackpot game with Multi-Jack players are attracted with three different Jackpots at the same time. Apart from hard- and software, ICS|Europe also develops various concepts for games, for example: •

Rocket7: a very nice, easy to use and attractive dice-game, in which the players can throw the dice like craps, this game is not as complicated as craps. The game is very attractive to first time visitors and groups of people who go to the casino together.

•

Qilin: our next hit on the casino floor! This game complies with a number of conditions for a game to be succesful. This game, again, is very simple and extremely easy to play. It has the perfect spread of winning probabilities and payments (ranging from 1:1 to 34:1), which makes it very interesting for all players to join in. Qilin has the perfect house edge of 2,78%. We believe this game will not only attract experienced players, but also the inexperienced players. That’s what makes this game special.

ICS|Europe intends to find new opportunities to develop new games. It is common knowledge that during the last few years barely any innovations in life casino table games have taken place. Despite existing variations of Poker games, we are convinced that Qilin has the potential for being the first to create a big change. This could be interesting to casino operators and as well as their game portfolio.

For more information visit: www.ics-eu.com

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SECURITY & SURVEILLANCE

LEAVING NOTHING TO CHANCE FROM SWITZERLAND TO AFRICA BY FRANK OETJEN

By constantly pushing the boundaries to stay ahead of any potential breach, security technologies and the attendant operational infrastructures are increasingly adopting state-of-the-art high-performance systems. But achieving that often requires transitioning from legacy systems and, in doing so, there must be an absolute minimum of exposure. Getting the protection of premises and guests just right and without interruption is therefore paramount whatever the circumstances.

he performance requirements for video surveillance systems are steadily increasing and many casinos therefore modernise their existing CCTV installations and replace them with state-of-the-art security systems. The following article, based on two case studies, describes appropriate video security technology solutions applied in two very differently located casinos: the Grand West Casino in South Africa and the Casino Bad Ragaz in Switzerland.

GRAND WEST CASINO, SOUTH AFRICA Slot machines, roulette tables and entertainment premises the offer at the Grand West Casino near Cape Town leaves nothing to be desired. The Grand West, which is part of the Sun International Group, is the largest casino in South Africa and now also relies on video security technology from Dallmeier, following on from the Golden Valley Casino that already operates one of our solutions. Grand West is a huge entertainment hub close to Cape Town in South Africa operated by the Sun International Group. The heart of the Victorian-style complex is the Casino building: 2,500 glitzy slot machines and 68 gaming tables - among others BlackJack, Poker, American Roulette provide for un-diluted joy of gambling at the highest stage. As with the whole facility the casino itself is designed to reflect the history of Cape Town. The Casino is surrounded by a variety of bars, bistros and restaurants, which cater for all tastes. There is, for instance, a jazz venue which offers live music on a regular basis. A cinema, a spectacular Super Bowl facility and two Ice Rinks round off the offer. Families with children are also welcome at the Grand West, for the children have an entire Casino & Gaming International I 29

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park at their disposal modelled on the Fort of Good Hope dating from the year 1652. It includes carousels, a miniature golf course, a rollercoaster as well as a huge ship that can be boarded by children to prevent boredom. Finally, two hotels, the Cape Dutch City Lodge Hotel and the Grand Hotel, provide convenient overnight accommodation close to the casino. TECHNOLOGY IN THE COURSE OF TIME The security of the guests across the entire entertainment complex and surveillance in the Casino, have always been a top priority which is why the casino has been operating a video surveillance system ever since its formal opening in 2000. Meanwhile though, the original system failed to meet the security personnel's high level of requirements. For a long time, analogue recorders which recorded on VHS cassettes were being used. As a high-maintenance installation, parts subject to wear and tear had to be exchanged regularly and the VHS cassettes needed to be changed by hand once the magnetic tape was full. Whenever the casino wanted to retrieve relevant image sequences for research purposes, the search was usually very laborious and time-consuming. The individual video cassettes had to be looked at one-by-one until the required sequence was found. Through frequent viewing the quality of the tapes worsened, which meant that they often had to be exchanged.

30 I Casino & Gaming International

The management decided to switch to digital recording and a digital matrix was used for playback, while the existing analogue matrix was to be used additionally for displaying live images. In order to realise this, a hybrid solution had to be created. The needs of the new system were also clearly defined for all other aspects of the application: a reliable recording system with the highest possible availability and high-quality images which would provide detailed and clear evidence in case of an emergency. When it came to choosing suitable products, we came out on top. Sun International Group already had a positive experience with our company during the installation work at the Golden Valley Casino. Jaco Coetzee, who is the Director for Gaming Compliance and Tables at Sun International, explained why he chose us: "Particularly, the main reason for our decision was the high availability and reliability of the system." RECORDING WITH 99.99994% AVAILABILITY Thanks to a sophisticated technology and intelligent structure (modular concept) our video system achieves an availability of 99.99994 percent. This is made possible by storing the data directly at the encoder, the DIS-2/M. Therefore, recording is network-independent, which means it remains intact even in the case of disturbances or a complete network failure.

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>> THE MIGRATION TO A NEW CCTV SYSTEM IS NOT ALWAYS EASY. AFTER ALL, THE ENTIRE SYSTEM EXCHANGE HAS TO BE CARRIED OUT WITHOUT INTERRUPTING DAILY CASINO BUSINESS. ALSO, IN ORDER TO FULFIL LEGAL REQUIREMENTS, THE OLD AND THE NEW SYSTEM WERE OPERATED SIMULTANEOUSLY FOR 28 DAYS AT BAD RAGAZ CASINO. SUBSEQUENTLY, THE CASINO SWITCHED TO THE NEW SYSTEM COMPLETELY AND THE OLD SYSTEM WAS DISMANTLED. DURING ALL THAT, THE CASINO DID NOT HAVE TO CLOSE ITS DOORS FOR EVEN A MINUTE. >> The DIS-2/M is a one channel audio and video encoder, designed for the installation and operation in a 19inch module rack. The system is highly service- and maintenance friendly. If a disruption occurs, the defective components can be replaced channel by channel. Owing to the HotPlug functionality of the modules, the exchange can be carried out during operation, thereby reducing downtime to a minimum. All in all, more than 900 channels with a total storage capacity of over 500TB are operated at the Grand West Casino. USER-FRIENDLY MANAGEMENT In order to facilitate complete control and administration of the CCTV system, a total of 22 operator stations were installed. Fifteen of these workplaces are equipped with a PView Station, a stand-alone evaluation and management station for our recorders. Its high-performance CPU allows for a judder-free video display at high image quality in up to 14 independent splits. The other seven workstations are equipped with the security management system, which facilitates an efficient control of the complete installation. For example, among other things, it offers an easy to use graphic user interface and the possibility of integrating site plans to allow for an intuitive camera selection. We designed the system together with Sun International. Based on the customer's special requirements the system has been customised in order to achieve highest efficiency for the casino's CCTV operation. With our management system Grand West Casino is very well prepared for the possible next step of migrating to a full-IP matrix solution. CUSTOM-MADE CASINO SOLUTIONS With its new CCTV system, the Grand West Casino is in good company, as we have long been successfully equipping casinos around the world with high-class video security technology. Like other projects before, the Grand West Casino has again demonstrated that their extensive requirements regarding video surveillance cannot be met by standard mass products. Only a tailor-made solution whose individual components are all specifically developed and manufactured with the conditions in casinos in mind can provide the quality and high availability which is partly required by law and is, therefore, so important to casinos. CASINO BAD RAGAZ The Casino Bad Ragaz in Switzerland offers pleasant diversion in a unique setting. Embedded in the Grand

Resort Bad Ragaz the casino captivates visitors with an appealing architecture and extraordinary design. The impressive play of water in front of the entrance already conveys to guests a taste of the exceptional things to come. Not quite as noticeable, yet no less impressive is the video system from us that provides for the safety of the guests. Deep in the wild and romantic Tamina gorge in Switzerland springs a source of hot thermal water. It is the heart of the Grand Resort Bad Ragaz, where guests from all over the world can enjoy a soothing combination of wellness, recreation and entertainment. The unique mix of luxurious hotel business, gastronomy, wellness with its own thermal water, health, business and golf make the Grand Resort a distinctive and unique location. The Casino Bad Ragaz, located in the middle of the beautiful grounds of the Grand Resort, offers excitement and diversion. It offers international live games in a traditional and exciting form: four desks with American Roulette, three desks for Black Jack and two Poker tables. Right next to the area of live games the choice of slot machines leaves nothing to be desired. Apart from state-ofthe art slot machines such as Super Cherry and poker machines, two attractive jackpots and the bonus game Dragon Boat are waiting for gamblers. Culinary delicacies are served in a variety of restaurants such as the Olives d'Or or the Zollstube at the adjacent Hof Ragaz. Whether as a guest in one of the restaurants, as an active player or rather as an interested spectator at the casino bar: The stay at the Casino Bad Ragaz will definitely be an unforgettable experience! So that a great day at the casino is not impaired by negative events such as pick pocketing or arguments at the gambling table, a state-of-the-art video security system by us ensures that any issues can immediately and conclusively be resolved. ENHANCED IMAGE QUALITY THROUGH NEW CCTV SYSTEM The ceremonial opening of the Casino Bad Ragaz took place in December 2002, and from day one the casino carried comprehensive video surveillance. In the meantime, however, the system installed back then was no longer up to date. Also the Eidgenรถssische Spielbankenkommission (ESBK), the Swiss regulatory body for the gambling industry, imposed very high standards on the Casino regarding image quality and recording. Therefore, a new video system was needed which naturally had to meet the highest image quality and reliability requirements. The management of the Casino Bad Casino & Gaming International I 31

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Ragaz were serious about the task and informed themselves extensively about all the solutions currently available. A visit to our company eventually turned the balance and the Casino decided to choose our products which are used in casinos of all sizes around the world. Beat Scheuber, Director of the Casino Bad Ragaz, explains the decision to adopt our system: "We conducted some really thorough research and found that the solution offered was the only one that could fulfil our requirements." SPECIAL CASINO CAMERAS The open system architecture of our solution allowed the casino to integrate most of the existing cameras into the new system. Wherever additional cameras were necessary, the casino decided to go with our PTZ dome cameras as well as the CasinoCam DF3000A, a high-resolution UWDR colour box camera with Camâ&#x20AC;&#x2122;inPIX(r) technology. Owing to a specifically developed software with proprietary Casino Presets ('Wheel', 'Gambling', 'Poker Table' and 'Slot Machine') the camera is ideally suited for casino applications. Even under difficult lighting conditions it delivers clear, detailed and true-colour images without any blooming or smearing effects. RECORDING WITH HIGHEST AVAILABILITY Images are recorded on our DIS-2/M UTP. Besides the high availability of the recording the system also offers the possibility for Dual Streaming. Thereby, a different quality can be selected for the transmission of live images than is used for the recording. The standards set by the ESBK regulators regarding the enhancement of the image quality could also be convincingly met. Whereas recordings were previously only made in CIF, the images are now recorded in D1 resolution. As is requested by Swiss law the recordings are stored for 28 days. USER-FRIENDLY MANAGEMENT Two workstations were set up for the control of the system, each equipped with a Video Management Centre VMC-1 'Eagle'. The modular VMC-1 comprises a monitor, keyboard, joystick and Jog Shuttle and is suited for both left- and right-handed operators. The interactive 6-inch TFT monitor with a resolution of 640x480 pixels allows for the display of live images as well as recorded image material. The Jog Shuttle is ideally suited for quickly finding certain individual pictures within a video sequence, while the joystick can be used to conveniently control PTZ cameras. Moreover, the joystick can also be used as a mouse and thus enables an easy menu control. INSTALLATION WITH NO DOWNTIME The migration to a new CCTV system is not always easy. After all, the entire system exchange has to be carried out without interrupting daily casino business. Also, in order to fulfil legal requirements, the old and the new system were operated simultaneously for 28 days. Subsequently, the casino switched to the new system completely and the old system was dismantled. During all that, the casino did not have to close its doors for even a minute. The installation was carried out by our branch office in Switzerland; and apart from our project team the Casino Bad Ragaz therefore also has direct contact there enabling regularly checks to be made to see that everything is in 32 I Casino & Gaming International

order following the installation of the system. Beat Scheuber is satisfied we were "conscientiously looking after" the Casino. In fact, he said: "After the installation of the system, we are not left alone but always have a competent contact at our disposal." CGI

FRANK OETJEN Frank Oetjen is International Sales Manager of Dallmeier electronic and responsible for Southern Africa and Australia. He has more than 15 years of experience in the CCTV industry and has been responsible for many national and international CCTV projects. Since 2001 he led the development of Dallmeier's digital matrix system and managed the implementation of the first digital matrix system worldwide. Many international projects have been implemented based on this technology since then - especially for Casino Solutions. www.dallmeier.com ; www.caminpix.com ; www.casino-surveillance.com

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NEW ! LIVE CASINO LIVE BETTING

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UGSPAY WHY CHOOSE US ? We act as a local payment solution provider, we strive to employ people from different cultural backgrounds and this provides our company with a unique, dynamic and international atmosphere and as a result we see ourselves as a local supplier wherever you are in the world. We aim to offer to our Merchants the possibility to offer their ccustomers the use of local payment cards that aren’t issued for international use, such as Visa or MasterCard. FINANCIAL REASONS Because of the high turnover we bring to our selected banks and partners, we are in a position to give our Merchants very competitive rates. In addition to this, our accounting department is committed to guarantee reliable and accurate payments. STRATEGICALLY REASONS With UGSPAY, your company will have the opportunity to receive Credit Card payments World Wide, multiple currencies and a wide range of local payment cards. UGSPAY are strategically, technically and ﬁnancially independent from any bank, government or corporation. Feel free to contact us personally and ﬁnd out why we are one of the best payment providers available. YOU NEED 100% UPTIME Often with other payment providers, there is a single point of failure that can bring an entire system down. For example, if the bank experiences downtime, often that means that you will also be affected and experience downtime.

UNITED KINGDOM UGSPay Ltd. 406 Parkway House Sheen Lane London SW14 8LS United Kingdom

P: + 44 (0)208 876 5855 F: + 44 (0)870 288 9475 M: info@ugspay.com W: www.ugspay.com

FRANCE UGSPay Residence Aquarella 6 Rue des Consuls, Port Ariane 34970 Lattes

UGSPAY is able to effortlessly redirect that transaction through another financial establishment, ensuring that your system is working 100% of the time. YOU NEED REAL TIME INFORMATION We consider the communication between our copanies a key factor of success for a good relationship. To help achieve this, we give you access to our unique administration interface: a private forum between you and us. TECHNICAL REASONS All UGSPAY software is developed in-house by our team of programmers, designers and architects. Any special requirements can be handled directly by our staff in a professional and timely manner. Our strong industry experience has allowed us to develop a broad range of products that satisfy leading marketing methodologies. We are more than our competitors in constant search to use the best and most advanced technologies and unique applications in order to provide the best value for money and solutions to our Credit Card Merchants. Furthermore we have the highest PCI certification and PSP status which guarantees the Bank a certain standard of expertise and enable the Banks to categorise our technical and security level in the Processing industry as one of the best. With this certification, Banks, merchants and card holders can be assured that UGSPAY’s systems and infrastructure will always be 100% secure.

P: +33 (0)4 67 47 36 94 F: +33 (0)4 67 47 36 94 M: infofr@ugspay.com W: www.ugspay.com

DENMARK UGSPay Frichsparken Soeren Frichs Vej 40G 8270 Aabyhoej Denmark

P: +45 2982 2368 F: +45 8677 0715 M: infodk@ugspay.com W: www.ugspay.com

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SERVER BASED GAMING

EMBRACING CHANGE: STAYING AHEAD OF THE INNOVATION CURVE

BY LEE GREGORY

Operators putting digital at the heart of company strategy - particularly with server-based gaming - reap the benefits of its efficient, cost-effectiveness. Following key advances with digital casino terminals and their support platforms, server-based gaming employs advanced and connected technology giving casino operators both control and flexibility. As players' gaming horizons expand and new products create new expectations, so too casinos are adjusting to the growing impact of remote technologies by putting innovation at the heart of business.

ver the last few years, there have been some significant changes at the core of the casino industry. Globally, casino businesses both big and small have had to combat the negative impact of changing legislation, smoking bans and revised taxation levels. In addition, the casino consumer is changing online gaming and developments in technology have produced a more savvy gamer with certain expectations in terms of usability and leisure experience. At the same time, there have also been some exciting developments such as the double digit growth being witnessed in new territories, particularly Asia, and the product innovation that is shaking up the more established areas of the casino market. The casino industry worldwide is at an innovation crossroad and it's never been more important for casinos operators to invest in the right technology and embrace change. Without a doubt, one of the key developments in casino technology has been the introduction of digital casino terminals and the powerful technology platforms that lie behind the products. We have been developing and implementing Server-Based Gaming for a decade now, but we still believe there is much more SBG has to offer for those operators that put digital at the heart of their strategy. By employing advanced and connected technology, casino operators have both control and flexibility. They effectively tailor the consumer experience depending on time of day, trends, current events and popularity all with the switch of a button. Promotions and other casino

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SERVER BASED GAMING

>> WITHOUT A DOUBT, ONE OF THE KEY DEVELOPMENTS IN CASINO TECHNOLOGY HAS BEEN THE INTRODUCTION OF DIGITAL CASINO TERMINALS AND THE POWERFUL TECHNOLOGY PLATFORMS THAT LIE BEHIND THE PRODUCTS. WE HAVE BEEN DEVELOPING AND IMPLEMENTING SERVER-BASED GAMING FOR A DECADE NOW, BUT WE STILL BELIEVE THERE IS MUCH MORE SBG HAS TO OFFER FOR THOSE OPERATORS THAT PUT DIGITAL AT THE HEART OF THEIR STRATEGY. >> marketing, including loyalty schemes, become easy tasks that can be managed using simple tools. SBG also reduces the downtime of terminals - we are focused on constantly improving the capabilities of our 24/7 support services and currently over 50 percent of all faults are fixed remotely, often before the fault is detected. While this is all great news for operators that traditionally had to move terminals to change content, SBG providers should not rest on their laurels. It is vital for us that we keep on raising the bar higher to truly make the most of the opportunities the technology provides. Why with all this power and endless flexibility would operators want their content, platform and terminal to be tied together under a proprietary system? Our Open Server Based Gaming, the 'Grade A' version of the technology, peels away all of the components so that operators can choose the best platform, the best content and the format or channel that bests suits them, their venues and their customers. Open SBG creates an open content market, much like the development of the app market with Apple's open source approach. This allows casino operators to choose content from different third-party developers and offer the latest games to maximise revenue and encourage repeat play. Our open content API is easy for developers to write for, thus creating a global network of the best third party developers supplying us and our customers with the largest library of content. Open SBG is proven to double incomes compared to analogue and is also a cut above proprietary SBG systems, which is why our Multi-Win Roulette consistently delivers the highest revenues of any electronic roulette product. Open SBG is all about enabling operators to offer the best-in-breed content to customers. The 21st century consumer lives a connected life with significant content options whether that is news publications, TV channels or mobile content. Casino customers expect to experience the same level of choice - they are more selective and have greater expectations. Driving revenue over the coming years will be about creating innovative gaming experiences that customers will increasingly come to demand over the next decade. The casino of 2020 will look very different - not just stylistically but also in terms of technology infrastructure.

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There has been a significant amount of innovation already when it comes to the casino sector. Many businesses have been quick to take advantage of Open SBG and are reaping the benefits. Operators including Gala Bingo, Gala Casinos and Silver Heritage Limited have been using this technology for some time. "There is a real pressure on the casino industry to continually innovate to keep the changing customer engaged," says John Pettit, Machines Director at the Gala Coral Group. "Over the last few years we have really seen the value the Open SBG platform adds in ensuring that our customers have the most up-to-date player experience whether that is in our casinos or bingo halls. There are so many gaming and leisure options available to consumers today. Gala is focused on delivering the most advanced, flexible and enjoyable experience possible." As one of the key players in the casino industry, we invest a significant amount of money into R&D. We look at how smart technology is being used in other industries and how we can build on it or even develop bespoke systems to use with our own customers. Two interesting areas are remote gaming and handheld technology. Both of these developments are likely to drive innovation in the casino sector in the next ten years with both being significant features of the casino of the future. A PERSONAL YET REMOTE EXPERIENCE Remote gaming within the casino environment means that the live table game is actually happening in a different location to the player at the terminal. The game will be streamed from one central location but allow players across multiple sites to play remotely. Remote gaming offers casinos significant cost savings. Live table games are growing in popularity both online and off and they are traditionally personnel-heavy. By streaming the game from one remote location to multiple sites, the casino sector can exploit the live gaming experience in a more cost effective way. This allows for investment in a greater variety of content, from the popular games to the more niche offerings. Currently, there are significant commercial restraints when it comes to live table games - only the most popular games get floor space and only on a limited schedule. Remote gaming will allow casinos to

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SERVER BASED GAMING

>> OPEN SBG CREATES AN OPEN CONTENT MARKET, MUCH LIKE THE DEVELOPMENT OF THE APP MARKET WITH APPLE'S OPEN SOURCE APPROACH. THIS ALLOWS CASINO OPERATORS TO CHOOSE CONTENT FROM DIFFERENT THIRD-PARTY DEVELOPERS AND OFFER THE LATEST GAMES TO MAXIMISE REVENUE AND ENCOURAGE REPEAT PLAY. >> offer the same social gaming experience with more options to all customers, more frequently and at less cost. HANDHELD GAMING FLEXIBILITY The other area for development is handheld gaming. We expect this to flourish within the casino sector in the next few years. The bingo sector has been using handheld terminals from for some time and we are looking to build on this experience. Gala Bingo currently has over 3,500 handheld terminals which are already driving year-on-year growth. The current handhelds come in two different sizes - both 12" and 10", are fully wireless and have a robust design. Handheld games allow for a more personalised, private gaming experience with much more focus on content (as opposed to terminal design). In addition, handhelds will allow casinos to move away from the traditional casino layout and create a more modern, comfortable gaming environment. Our work within bingo halls with handheld terminals has proven the customer demand for flexibility. With handhelds in casinos, customers will be able to move around the licensed areas of the venue as they please visiting the coffee or snack bar or other facilities. The portability of the technology will also allow the casino operator itself to be more flexible with its venue. There are no repositioning costs as all handhelds are on mobile charging racks and the incremental cost of additional terminals is minimal once the wireless infrastructure is in place. In the wider world, personal devices are gaining popularity. The launch of the iPad and the take-up of the iPhone and netbooks mean that consumers have certain expectations. Casinos are in a fortunate position in that they can emulate this personal gaming experience within the casino environment at a moderate cost to the business. BE IN IT TO WIN IT This article has re-examined how casino operators can put innovation at the heart of the business today; by choosing an Open SBG platform. Looking ahead to the coming decade, two innovations I am betting on becoming a winner in casinos are undoubtedly remote and handheld gaming. Casino operators all feel the pressure to offer a cutting edge gaming experience and I would urge them to think of what their casino should look like in 2020, when deciding whether to go digital today.

Both remote gaming and the introduction of handheld terminals take advantage of Server-Based Gaming and therefore the right infrastructure needs to be in place. Casinos need to start making the necessary upgrades now in order to stay competitive. Convergence has already played a key part in the growth and widespread uptake of new technology. Open SBG has brought to life the first multi-functional terminals, offering a host of different games, including slots, multi-win roulette and skill gaming, all within one machine and the industry needs to be prepared for more development. Even the oldest of casinos can easily integrate the required kit to upgrade to a server-based approach with a bit of additional engineer time. Without a connected infrastructure, casino operators are going to struggle to keep up with the developments in technology and their revenues will take the hit. CGI

LEE GREGORY Lee Gregory is Managing Director, Inspired Gaming Group, UK Gaming, and a specialist with 25 years expansive knowledge of the gaming sector worldwide. He was Game Development Director for the Maygay group until the acquisition by Leisure Link. In the server-based space, Lee was instrumental in the early rollout of the Gala Gaming Platform before taking responsibility for the Digital Gaming offer in pubs. Inspired have been a leading player in the SBG market for seven years having deployed over 50,000 machines in 10 countries and, to date, in excess of 25,000 machines have been connected to the Open SBG platform. When Leisure Link rebranded to Inspired Gaming Group, it took advantage of having a single asset with multiple content available and is now a leader in Open SBG.

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Powering the online gaming industry since 1998 We simply provide world class hosting, network and technical services with a proven disaster recovery track record to the worldâ&#x20AC;&#x2122;s most demanding online businesses. If uptime is important to your business then call Domicilium today. www.domicilium.com

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Our switched MPLS backbone was implemented in 2004 and designed from the ground up to exceed the stringent latency, throughput and jitter demands of highly risk averse businesses including the financial services sector while providing critical services such as DDoS protection. Our network core extends diversely from our co-location facilities in the Isle of Man into Manchester and the heart of the European communications hub in London Telehouse. As members of the London Internet Exchange (LINX) we deliver optimal performance to you and your customers by peering with all major Tier-1 providers.

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e-gaming’s multi-jurisdictional hosting solution Co-location Managed Services Disaster Recovery DDoS Protection Content Delivery Global Private Network

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DATA CENTRE DEVELOPMENT

SINGLE CONTACT, GLOBAL CAPABILITY – DEFINING THE HOSTING HORIZON INTERVIEW WITH PETER WILLIAMS

For hosting providers, as the online gaming industry matures, so the pressure for enhanced levels of service increases and an extended geographical footprint to successfully support gaming companies becomes a requirement as they enter new markets and face new legislative challenges: Computing on demand, greater use of broadband, a maturing regulatory landscape, attraction to more secure services and flexibility, accommodating tough licensing structures – all of this defines, or will define, the future for

GI: Given that market conditions have proved successful for data centres over the past year, do you see that being sustained?

PW: If the market conditions remain constant over the next twelve months then the answer would be yes. However, considering the pace at which the gaming industry is moving, we see every development as an opportunity to grow our service and geographical capabilities by staying close to regulation, keeping an open and flexible approach to partner development and maintaining a healthy capital reserve to react to changing conditions for the benefit of Continent 8 and our customers alike. In the past year we have witnessed considerable growth in customer acquisition, service capability and locations from which they can be offered. Through expansion and investment we have fuelled increased customer acquisition, particularly in the area of shared and managed services. We have also greatly extended the services portfolio we provide to our existing customer base fuelling organic revenue growth and profitability. This growth has been largely driven by success in the egaming sector. In parallel, our company has grown, developed and delivered new products and services designed to address the sector requirements while expanding its jurisdictional footprint with many data centres across multiple continents. This has been the key to expanding the addressable market for our business. Looking at our core business sector, egaming’s market penetration has not reached saturation in most of the existing markets which is why the industry would appear to Casino & Gaming International I 41

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DATA CENTRE DEVELOPMENT

>> THERE ARE AREAS OF FUTURE POTENTIAL GROWTH AS GLOBAL REGIONS SEE A GREATER USE OF BROADBAND ESSENTIAL FOR A GOOD ONLINE EXPERIENCE. IT WOULD APPEAR THAT, AS THE REGULATORY LANDSCAPE MATURES, SO TOO WILL THE HOSTING REQUIREMENTS, AS IS CLEAR FROM THE RECENT FRAMEWORK IN FRANCE. OTHER COUNTRIES ARE TAKING A CLOSE INTEREST IN HOW THE FRENCH MODEL PROGRESSES AND COULD SEE OTHER COUNTRIES ADOPTING A SIMILAR MODEL. WE WILL BE READY IN CHOSEN JURISDICTIONS TO DELIVER TURNKEY SOLUTIONS JUST AS WE HAVE DONE IN FRANCE. >> have been relatively recession proof. There are also areas of future potential growth as global regions see a greater use of broadband - essential for a good online experience. It would appear that, as the regulatory landscape matures, so too will the hosting requirements, as is clear from the recent framework in France. Other countries are taking a close interest in how the French model progresses and could see other countries adopting a similar model. We will be ready in chosen jurisdictions to deliver turnkey solutions just as we have done in France. Another interesting development is the agreement that was signed in June between the Kahnawake Gaming Commission (KGC) and Financial Services Regulatory Commission for Antigua and Barbuda (FSRC). With approval a company that holds a ‘primary license’ in Antigua is permitted to host their infrastructure in Kahnawake under an inter-jurisdictional agreement between the KGC and FSRC. CGI: Historically, how significant has egaming become for data centres over recent years in your view? PW: Obviously, for us egaming is our key sector. We are reviewing our future strategy in terms of vertical target markets but as things stand today we work exclusively with egaming and related organisations. Our solution and service approach is based on over 12 years of delivering global solutions designed specifically to meet the’ everincreasing growth and expansion of this sector. Through Mohawk Internet Technologies (MIT) Continent 8 was formed in 1998 with the sole intention of servicing the egaming industry. Many of the leading egaming companies have built their businesses through our hosting facilities at Kahnawake, and subsequently expanding into our other regional data centres. Today, they are globally recognised brands but many of these were start-ups when they were first hosted by us. The significance for the more mainstream data centres in the major European and North American cities has been also lucrative, though to date not evident in the media. The reason for this is that these mainstream data centres market their services to all industry verticals, not having the experience or resource to exercise the same degree of flexibility specific to a single vertical such as egaming. Their service portfolios are generic and their support models are designed to address volume rather than quality. 42 I Casino & Gaming International

This is not to say that they don’t provide a good level of service, they do. Clearly, egaming requires a flexible, yet reliable approach when it comes to service and support. It is simply not possible to offer these levels of flexibility when you are supporting thousands of customers. In the last six months we have witnessed a growing number of customers, transitioning the non-gaming infrastructure elements into our data centres in the regulated jurisdictions to avail of a better level of service and flexibility. CGI: With your data centres established around the world, what has been their comparative impact and value to egaming operators? PW: We are the only data centre provider that can offer a multi-jurisdiction solution approach to the gaming sector in the regulated jurisdictions. I should add: we have built a private global network in addition to peering in major locations with Tier 1 ISPs. There are many advantages of working with a single partner with such capability. Examples are; *Single Point of Contact *Single Contract *Single Billing Model *Single point of contact for support, account management and administration *On-Net Disaster Recovery data replication *Single service approach to support all global footprints, such as Content Delivery, Denial of Service Protection and a fully Managed services approach. CGI: Is there much licensing technology variation between the data centre locations? PW: The service approach in each jurisdiction may vary slightly, and is normally dependent to whatever level of redundancy and reliability is available locally. The one element that we have witnessed a greater level of variance on is the certifications and documentation that is required to satisfy local regulators and authorities. France is a prime example of a jurisdiction that dictates specific procedures that must be in place before hosting services can be offered. We have successfully satisfied all criteria to date and see no barriers to maintaining this in our future global expansion plans.

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CGI: It has no doubt been a challenge providing constant management and service expertise to keep on top of demand â&#x20AC;&#x201C; whatâ&#x20AC;&#x2122;s your edge? PW: Investment in a highly skilled and experienced senior management team, the appropriate business and technical tools to support the business and a partnership rather than a supplier relationship approach with our customers has been the key to staying on top of demand. Successful partnering is also a key to success. Our company understands that we cannot be everything to everybody, yet customer preference is for turnkey solutions. Our clients also look to us for regulatory advice, corporate services and financial modelling and this is where appropriate partnering brings such capabilities under our companyâ&#x20AC;&#x2122;s umbrella. CGI: Have the data centres simply expanded in hardware terms or has the capacity for new technological capabilities become the priority? PW: Expansion in basic footprint and hardware terms is constant but the competitive edge will certainly come from technological innovation. Power as an example is a costly

component of our service offering, so we look constantly at more energy efficient models while being careful not compromise delivery. Traditionally, we have offered standard co-location services but this has now changed. We are seeing a greater take-up of our managed services offerings and are also enhancing our content delivery, denial of service and network management services. Computing on demand will be the way of the future for industry in general and this is an area we are looking to launch services around in the very near future. CGI: Where do you consider the best competitive market entry potential to be and how are you taking advantage of that? PW: This is not such an easy question to answer and requires a detailed understanding of regulation together with a crystal ball. The Asian market is certainly a huge growth opportunity for the gaming sector and we have already commissioned a review of that market to decide on the next steps. South America will also be lucrative but I guess the real question is will the United States open up the market; when will it happen and what will be the

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Isle of Man Data Centre

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criteria for obtaining licenses and providing services to support the sector in that region. We already have the expertise on our board of directors which includes Otto Jelinek, former Minister for National Revenue in Canada and Frank Catania, former Director of the New Jersey Division of Gaming Enforcement (NJDGE) and now serving as Chair of the International Masters of Gaming Law. Our knowledge and experience in this sector is our key advantage.

in network and facilities is to provide our customer’s customers with the best online experience available. As traffic and requirements of our clients increase, we are committed to providing leading edge services to meet growing sophisticated demands.

CGI: Why France and what are you planning to achieve there?

PW: We take the environment seriously and have several initiatives towards making our company greener while reducing our impact on the environment. Data centre power consumption and supply is a topic high up on every engineer’s agenda. The Kahnawake Data Centre is supplied by Hydro-Québec who supplies its customers with power from renewable sources, such as hydropower and wind power. At the moment, 97 percent of Hydro-Québec output is hydroelectric. Our Isle of Man Data Centre, which is only two years old, is fed by a new highly efficient gas turbine Power Station that is less than 500m from the data centre. We continually review all processes and building techniques to implement the most energy efficient infrastructure possible, as well as working closely with our suppliers to reduce the packaging requirements for equipment and sourcing locally where possible. Our commitment to the environment continues by progressively upgrading fire suppression systems to use non-toxic, carbon neutral solutions such as Novec 1230. These new solutions presents a win-win scenario as they are both friendly to the environment and equipment.

PW: As part of our private global network expansion we had already chosen Paris for our most recent network point of presence. With the French licensing regulations rushed through in April 2010, a number of our existing clients needed hosting facilities in full compliance with the stringent requirements laid down by the French egaming regulatory body l’Autorité de Régulation des Jeux en Ligne (ARJEL). Having already been through our extensive due diligence in choosing our partner for the point of presence, it was a relatively quick decision to expand our footprint into France to provide hosting solutions through a formal partnership with Telehouse France. This partnership provides a platform for growth between Telehouse France and Continent 8, which is designed to deliver customer solutions to address the egaming market within France. This partnership has been driven by the intimate understanding of our customers’ needs, and the ability to react to market, regulatory and technology changes. With over 30 years combined experience, this strategic partnership gives our clients ultimate reliability and a range of services specifically designed to serve the egaming community The hosting facility (known as Telehouse 3) is a former military site with exceptional physical security and is located at Magny-Les-Hameaux. Several of our customers have already taken up services here to avail of this uniquely advantageous solution. CGI: To what extent does it represent the next step in an expanding, global data centre network strategy? PW: We initially established our point of presence (POP) in Paris to increase the private network capabilities of the company, in addition to geographical redundancy for network connections between Europe, North America and Asia. These network improvements form the basis for expansion of our global presence which connects the data centres and links France with London, Isle of Man, Malta and Montreal through dedicated connections. It also allows us to increase peering agreements in addition to those already established in London and Montreal to add further choice and resilience. Increasing this dedicated egaming network capability and diversity allows for continued development of existing products and services such as Disaster Recovery, Distributed Denial of Service (DDoS) protection and Content Delivery Network (CDN) services, and investment

CGI: In Europe market attraction also depends on green legislative changes expected ahead. Is that of particular consequence to you there and elsewhere?

CGI: Optimal private network capabilities are vital to your internal functioning but does expansion pose particular challenges to maintaining efficiency? PW: Not at all. We have a number of satellite offices, home workers and regional installations to control. We provide the same level of efficiency and support internally to that of our end-user customers. We recently hired a new Chief Technology Officer, John Stone, who joined us after 15 years at Cisco Systems. John brings a wealth of experience to all aspects of the business. Put quite simply, investing in the right people coupled with the right operational support systems is the key to efficiency. CGI: Optimal power and telecoms systems are fundamental to any data centre which therefore directs where you go, but are there less developed markets under review such as Africa? PW: In contrast the availability of Telecoms has not been the key driver to establishing licensing jurisdictions. The challenge for a company such as Continent 8 is establishing operations in such jurisdictions and investing aggressively to provide the best possible experience for our customers. This is one of the key differentiators we bring to the table, but it does come at a cost. Telecommunications is improving all the time and I would assume that this will become less and less of a challenge over time. Casino & Gaming International I 45

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>> THE ASIAN MARKET IS CERTAINLY A HUGE GROWTH OPPORTUNITY FOR THE GAMING SECTOR AND WE HAVE ALREADY COMMISSIONED A REVIEW OF THAT MARKET TO DECIDE ON THE NEXT STEPS. SOUTH AMERICA WILL ALSO BE LUCRATIVE BUT I GUESS THE REAL QUESTION IS WILL THE UNITED STATES OPEN UP THE MARKET; WHEN WILL IT HAPPEN AND WHAT WILL BE THE CRITERIA FOR OBTAINING LICENSES AND PROVIDING SERVICES TO SUPPORT THE SECTOR IN THAT REGION. >> To take Africa as an example, it may be a key market in the future for online gaming companies but the cost of telecoms is unusually high and therefore not an ideal location for a data centre to host gaming servers. This is not to say that it couldnâ&#x20AC;&#x2122;t be established as a gaming jurisdiction, and challenges we face in such a scenario would be no different to those we have already overcome. CGI: Asia is an immense opportunity, but notwithstanding Singapore, will you face stiff competition unless you have partnership considerations in mind? PW: Asia is a territory we are actively assessing with regard to launching services to support existing customers in their expansion aspirations, and also address new markets. We will be happy to share our findings once we have had a little more time. CGI: It is increasingly thought that data centres are unable to meet egaming sector needs, but does that suggest more complex networks or perhaps data centres linked to super data centres? PW: For hosting providers, as the online gaming industry matures, so too does the demand for enhanced levels of service, and an extended geographical footprint to successfully support gaming companies as they enter new markets and face new regulatory challenges. We understand that itâ&#x20AC;&#x2122;s no longer possible for one data centre in any jurisdiction to provide for all the needs of an online gaming operator or software provider. There are the many jurisdictional complexities including licensing and taxation requirements, not to mention the complexities of marketing the product to the particular market. Our uniqueness derives from the fact that we are the only hosting provider operating in several geographies with a global network that allows for service levels to be maintained in almost any adverse conditions. Taking advantage of a global hosting solution from one service provider has many benefits; customers are only dealing with one vendor, one call centre and one service level agreement for their international operations. Economies of scale come into operation as your global footprint increases. We are comfortable with the fact we provide a level of service that is in line with egaming sector requirements, and will continue to invest in service capability to meet the growing need for more complex services as the industry matures.

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CGI: Gaining accreditation for payment card security (PCI DSS) has presumably enhanced your operation and is recognition of how vital security has to be taken today? PW: Accreditations and standards are a necessity to satisfy regulators, technical and security standards in all jurisdictions we operate in. We have implemented all necessary and appropriate standards required to provide a secure and reliable service. Security is obviously a vital requirement and will become more and more focused as new markets open up to gaming, such as France. CGI: Looking forward, what data centre developments are on the horizon? PW: In terms of licensing jurisdictions we are actively looking at Gibraltar, Guernsey and the Philippines. To support new markets and the new regulatory models we have recently launched services in France, and intend to replicate this model in other countries to support our existing and new customer base as regulation dictates. CGI

PETER WILLIAMS Peter has a wealth of experience with over 18 years in Senior Commercial roles in the Global communications sector. Before joining the company he was with Telefonica O2 Ireland. Previously, Peter worked with companies such as Cable & Wireless (Global Account director), BT Worldwide (Director of ICT Solutions), Energis Communications (Corporate Sales Director) and Cisco Systems (Regional Sales Manager). Peter has also worked with selected start-up organisations building value and growth across several geographies, and has extensive experience in implementing complex communications solutions for multi-nationals. Peter joins Continent 8 Technologies from his most recent post where he led a team in the setting of the ICT strategic direction for Telefonica O2 Ireland.

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Translation Specialists

On-Line Gaming Bingo Casino Lottery Poker Slots Sports Betting Legal Marketing Websites Software Payment Solutions Mobile Gaming

www.eteams.ie Contact Caroline Evans on + 353 61 921 121

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EUROPE ONLINE

THINNING THE FOG, BUT OPENING FOR BUSINESS?

BY JULIAN HARRIS

The murkiness of Europe’s gaming regulatory landscape is dissipating at a snail’s pace; and yet, as online gaming legislation moves imperceptibly forward, there are more than glimmers of hope. In essence, the previously divergent roads being followed by the European Court of Justice, the Commission and individual member states seem to be converging, and the road ahead is clear: a system of national licensing for the EU.

n common with specialist gaming lawyers throughout Europe, I have addressed numerous conferences on the subject of online gaming regulation in Europe where we are asked to speculate upon the future; in particular, whether national monopolies will be maintained, and if not, whether there will be a system of national licensing, or a Europe-wide licensing regime, and when any change will take place. Attempting to see through the fog that has enveloped the subject has been well nigh impossible; looking down the road laid by a number of European Court of Justice (ECJ) cases is one thing, but trying to predict where Europe is heading when overarching political considerations might divert or terminate the road is quite another. To some extent however, recent developments have – to continue the metaphor – thinned the fog, whilst not entirely clearing it. On 3rd June 2010 the ECJ delivered its judgments concerning the compatibility of the Netherlands’ legislation on gaming policy with European Union law in the referred cases of Ladbrokes referred by the Netherlands Supreme Court, and Betfair referred by the Netherlands Council of State. On 25th May 2010 the Spanish presidency of the European Union published a progress report on gambling prepared by the Working Group. Ministers had been able at least to reach an agreement on a common definition of illegal gambling. The key information from the 41-page Spanish report being a definition of “illegal gambling” as: “gambling in which operators do not comply with the national law of the country where services are offered, provided those national laws are in accordance with EU Treaty provisions.” On 5th May 2010, the European Commission terminated a series of cases brought against Italy, as a result of changes made

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>> THIS IS A SIGNIFICANT STEP. THE ECJ HAS STRICTLY LIMITED THE OPPORTUNITIES FOR MEMBER STATES TO MAINTAIN NATIONAL MONOPOLIES, AND HAVE SET OUT IN A SERIES OF CASES OVER MANY YEARS, THE PARAMETERS WITHIN WHICH MEMBER STATES CAN RESTRICT THEIR MARKETS. NOW THE COMMISSION TOO HAS SANCTIONED WHAT IS IN EFFECT A COMPROMISE ROUTE BETWEEN NATIONAL MONOPOLIES ON THE ONE HAND, AND THE MALTA/UK MODEL OF COMPLETE CROSSBORDER FREEDOM, ON THE OTHER. THIS NEW MODEL IS NOW ESTABLISHED, OR SOON TO BE, IN ITALY, FRANCE AND DENMARK, WITH OTHERS TO FOLLOW. >> to Italy’s laws on online gambling. The Commission had previously found that Italy’s restrictions on the foreign operators were disproportionate, but the Italian government’s legislation allowing operators to apply for licences have found favour with the Commission. On 2nd June 2010, Ioannis Spanoudakis, Chief Executive of the Greek gambling monopoly OPAP, said that he anticipates that Internet sports betting will be licensed in Greece within a year. He commented: “Legislation as applied in France and Italy and in other European areas is most likely to be the kind of guiding regulations that the Greek government will be basing its framework on.” In the UK, on 18th June 2010, the Government’s consultation on the future of online gaming came to an end. Although the consultation on proposals do require all operators wishing either to transact with customers in the UK or advertise in the UK was commenced by the previous Labour government, it was thought likely that they have the support of the new Conservative-Liberal Democrat coalition Government, and detailed legislative proposals are now awaited. It remains to be seen whether the European Commission’s Green Paper will advocate an EU wide gambling licensing system: this would be a radical step indeed, and almost certainly impossible to achieve politically. The progress report’s definition of “illegal gambling” supports that view. Leaving that issue to one side, at least for the moment, it is more instructive to look at recent developments to see whether there is some convergence in the different roads that European online gambling regulations have followed, to see whether, at last, there is some prospect of convergence. SCHINDLER TO BETFAIR/LADBROKES AND BEYOND Not only has there been a sense of divergence between the provision of member states politically on the one hand, and the law as expressed by the ECJ on the other, but the various ECJ decisions themselves have not seemed to state a clear position on the law. In the sixteen years since the Schindler case was decided in 1994, there have been a series of cases in which the ECJ have considered member states’ obligations in relation to Article 49 of the European Treaty. Article 49 requires the abolition of all restrictions on the freedom to provide services, even where those restrictions apply without distinction to national providers and to those in other member states. Article 46(1) of the Treaty allows restrictions which are justified on grounds of public policy, public security or public health. ECJ case law has also established a number of overriding reasons in the public interest which may also justify such restrictions, including, in particular, the objectives of consumer protection and the 50 I Casino & Gaming International

prevention of fraud and incitement to squander money on gambling, as well as the general need to preserve public order. Moral, religious or cultural factors may serve to justify a margin of discretion for national authorities, sufficient to enable them to determine what is required in order to ensure consumer protection and the preservation of public order. Member states are free to set the objectives to their policy on betting and gambling according to their own scale and values, and, where appropriate, to define the level of protection sought. However, any restrictive measure that they impose must satisfy the conditions laid down in ECJ case law, in particular as regards their proportionality. Furthermore, case law of the ECJ has established that it is for the national courts to determine whether member states’ legislation actually serves the objectives which seek to justify it and whether the restrictions do not appear disproportionate in the light of those objectives. It is against that background that the latest ECJ decisions were delivered on 3rd June in the Betfair and Ladbrokes cases. Both rulings were labelled as a defeat for online providers for games wishing to market their services within the EU under the terms of Article 49. In reality, they did little more than follow the previous decisions, confirming the principles already laid down by the court. The decisions provided three issues: 1. Can national legislation such as that in the Netherlands be regarded as limiting betting activities consistently where a monopoly is entitled to make their offering attractive by introducing new games and by advertising? The ECJ upheld established case law, concluding that the Netherlands legislation can be regarded as limiting gaming activities in these circumstances. The ECJ recognised that the Netherlands’ policy aim of protecting the consumer against gambling addiction is in principle difficult to reconcile with an expansive gaming policy, characterised by new games of chance and extensive advertising campaigns. It will be for the Netherlands Supreme Court to consider whether the substantial expansion of betting and gaming is in fact aimed at raising funds, in which case, in the view of the ECJ, such a policy would not be limiting betting and gaming “in a consistent and systematic manner and is not, therefore, suitable for achieving the objective of curbing consumer addiction to such activities.” 2. Is it for the national courts to determine whether the measures implemented before achieving the legislative objective is compatible with the principle of proportionality? The question is based on the assumption that the Netherlands legislation is compatible with Article 49. The court

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>> IN THE UK, ON 18TH JUNE 2010, THE GOVERNMENT’S CONSULTATION ON THE FUTURE OF ONLINE GAMING CAME TO AN END. ALTHOUGH THE CONSULTATION ON PROPOSALS DO REQUIRE ALL OPERATORS WISHING EITHER TO TRANSACT WITH CUSTOMERS IN THE UK OR ADVERTISE IN THE UK WAS COMMENCED BY THE PREVIOUS LABOUR GOVERNMENT, IT WAS THOUGHT LIKELY THAT THEY HAVE THE SUPPORT OF THE NEW CONSERVATIVE-LIBERAL DEMOCRAT COALITION GOVERNMENT, AND DETAILED LEGISLATIVE PROPOSALS ARE NOW AWAITED. >> determined that the court was not required to determine whether payment and ISP blocking measures are suitable for achieving the objective of the legislation and are compatible with the principle of proportionality. 3. Must Article 49 be interpreted to preclude legislation of a member state granting exclusive rights to one operator and prohibiting any other operator from another member state from offering betting or gaming? Once again, the ECJ rejects the principle of mutual recognition. Following the Santa Casa case, the court reminds us that internet gaming is not the subject of harmonisation within the European Union and that a member state is entitled to take the view that the mere fact that an operator is licensed in one member state is not necessarily a sufficient assurance consumers would be protected against the risks of fraud and crime in another. However, and importantly, the court also decided that it is irrelevant whether an operator does not pursue an active sales policy in the member state concerned, thus removing any distinction between an active and passive marketing policy. In the Betfair case, the court examined the legitimacy of the manner in which gaming licences are awarded in the Netherlands, and established that there is no competitive tendering process. The ECJ determined that there must be a treatment and transparency for the granting of a single licence, unless the state concerned grants the licence to an operator whose management is the subject of direct state supervision, or to a private operator whose activities are subject to strict control by the public authorities, where the absence of competitive tendering process would be proportionate. Once again, it is for the national court to ascertain whether in the Netherlands the holders’ licences are subject to strict control by the public authorities. The procedure must be justified under Article 45/46, or on the basis of overriding reasons to the public interest. Inevitably, these cases will now return to the Dutch courts. There will be some disappointment that these cases did not “break the mould”, but equally, they have not extended the power of member states in relation to national monopolies. It is disappointing the ECJ rulings do not address the fact that consumer choice between regulated products is ignored. Nevertheless, it remains the fact that not only do restrictive systems require to be justified, limiting the commercial proposition for a monopoly, in most cases there will need to be a proper tendering process. Member states are, like dominoes, realising that consumer protection can be achieved through regulation, and that giving the consumers choice, through a range of products offered by different operators, increases revenue: and revenue is the key.

‘GOODBYE TO ALL THAT’? Only two European member states, Malta and Great Britain, have sought to adhere strictly to Article 49. Both countries probably anticipated that this would establish a course which others would follow, but that does not appear to be the case. Instead, first Italy and then France opened their formerly closed markets to a ‘controlled liberalisation’ process based on national licences and strict conditions. The French law was passed in May, and the most important implementation decrees are in place, which the first licences issued. To all, it might appear that there is an even balance, but few would have put money on the next goal going to the GB/Malta team. Instead, the UK, much to Malta’s disappointment, if not anger, is proposing to join the France/Italy team. On 7th January 2010, the former Labour Government announced proposals for new licence requirements for overseas online gambling operators. These would require all those wishing to advertise their services in the UK or to transact with British customers, to be licensed by the UK Gambling Commission. More details of the Government’s proposals were published in a consultation document in March 2010 . The consultation concluded on 18th June. Meanwhile, a new Conservative-Liberal Democrat coalition Government is in place; and it remains to be seen what final proposals the new government decides upon though their thinking is not thought to be substantially different from that of their Labour predecessors. This represents a complete volte-face by the British Government and a clear indication of their assumption about the future of online gambling regulation in the EU. The indications are that others will follow suit. If Mr Spanoudakis of Greek operator OPAP is right, then an online licensing regime for sports betting at least is on the horizon. And according to Santiago of Asensi Abogados the Spanish Government is considering online gaming regulation within a few months, with the indications being that it will be inspired by the French law. In Denmark, liberalisation is well under way, with new licences likely to be issued at the beginning of 2011. It is expected that others will follow suit, though timing is uncertain. What is certain now is that the route forged by Malta and the UK has, in effect, come to a dead end. It is plainly not attractive to most other European states, and apparently now not even to the UK. The ECJ have not interpreted Article 49 in the way that Malta certainly would have liked, and it therefore remains only the European Commission that could force member states to divert back onto the Malta road. Although Poland considers that the ECJ’s decision in Bwin/Liga v Santa Casa gives it sufficient grounds to continue Casino & Gaming International I 51

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its ban on online gambling, it has recently submitted its amended draft regulations to the EU Commission which contain the first signs of an opening up of the online gambling market. The amended draft regulations exclude online sports betting operators from the ban provided that they obtain a (national) licence in Poland which appears to be in line with the French/Italian model. The conditions imposed on licence operators include the setting up of a Polish company. Interestingly enough, when France and Italy submitted their respective gambling regulations containing similar requirements, the Commission raised strong objections based – surprisingly – on the freedom to provide services across members’ states. STATE OF THE UNION Under the previous Trade Commissioner, Charles McCreevey, the Commission took infringement proceedings against numerous member states, including Italy, France, Finland, Sweden, Denmark, Greece and the Netherlands, on the basis that those states had closed online gambling markets, and were infringing the free movement of services required by Article 49. Whilst the Commission have had issues with the Italian legislation, now resolved, and with the French and Danish, the closure of its cases against Italy is significant. It is an indication that the Commission regards a national licensing regime as consistent with a member state’s obligations under Article 49. Although the Commission will not cease infringement proceedings until it has satisfied itself that any measures restricting the market are necessary – proportionate and nondiscriminatory – a system of national licensing, giving operators from other member states the opportunity to apply for licences, will not be regarded as unduly restrictive. This is a significant step. The ECJ has strictly limited the opportunities for member states to maintain national monopolies, and have set out in a series of cases over many years, the parameters within which member states can restrict their markets. Now the Commission too has sanctioned what is in effect a compromise route between national monopolies on the one hand, and the Malta/UK model of complete crossborder freedom, on the other. This new model is now established, or soon to be, in Italy, France and Denmark, with others to follow. GREEN PAPER OR GREEN LIGHT? The current Internal Market Commissioner, Michel Parnier, announced on 11th February 2010 that the EU Commission would look at the regulation of gambling in Europe, and said that the Commission “does not exclude” alternative solutions to individual infringement procedures between member states. He explained that he wants to “launch a constructive dialogue [on gambling] with Parliament and member states and concerned stakeholders”, and explained that an EU Green Paper would be the first step forward. Commissioner Parnier’s approach may be more restrictive than that of his predecessor, Commissioner McCreevey, but is perhaps more realistic, given the political realities. The termination of proceedings against Italy, following Italy’s opening of its market, subject to national licensing and regulation, is perhaps indicative of the Commission’s approach. Space does not allow for present purposes an analysis of the effects and consequences for operators of having to obtain licences in numerous member states, but if that is where the 52 I Casino & Gaming International

future lies, operators will want the Green Paper at least to propose, in the absence of a European-wide licence, the establishment of common European regulatory standards, applications, control procedures and protocols addressing operational measures. This at least would help to limit the spiralling costs of a system of multiple licences and multiple regulatory systems. In essence, therefore, the previously divergent roads being followed by the ECJ, the Commission and individual member states seem to be converging, and the road ahead is clear: a system of national licensing for the EU. That may not go unchallenged by operators, but it is, without doubt, the road currently being travelled. If that is the future, then the Commission must grasp the nettle of the burden it imposes upon operators, and ultimately consumers. CGI REFERENCES 1. Case C-258/08 2. Case C-203/08 3. Case C-275/92 Schindler [1994] ECR I-1039 4. Now changed to Article 56 of the Treaty on the Functioning of the EU. 5. Case C-42/07 Liga Portuguesa de Futebol Profissional and Bwin International [2009] ECR I-0000 6. Case C-243/01 Gambelli and Others [2003] ECR I-13031 and joint cases C-338/04, C-359/04 and C-360/04 Placanica and Others [2007] ECR I-1891 7. See Placanica case and Liga Portuguesa case 8. Consultation on the regulatory future on remote gambling in Great Britain: DCMS, 22 March 2010 9. Spanishgamingnews.com: June 2010

JULIAN HARRIS Recognised as a leading expert in national and international gambling and licensing law, Julian Harris is highly regarded by both operators and regulators throughout the world. He and John Hagan are the founder partners of Harris Hagan, the first and only UK law firm specialising exclusively in legal services to the gambling and leisure industries. He, John and other members of the firm have been at the forefront of those advising UK and international operators alike on the opportunities presented by the UK Government’s major reform of gambling law. With over 25 years experience of gambling law Julian has advised some of the world's largest gaming and entertainment industry corporations, he and his team have also advised governments, trade associations and private equity houses in both online and land based gaming. Julian came to specialise in this area representing the Gaming Board for Great Britain (the then UK regulator) for five years early in his career. Julian is an experienced advocate, a respected and sought after conference speaker and the author of numerous articles and papers for gaming and legal publications and the national press. He is recommended in all guides to the legal profession, and has been described by Chambers Guide as “the best gaming lawyer in London”. Julian is a Trustee and Treasurer to the International Association of Gaming Advisors. Contact Julian: harris@harrishagan.com

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The 9th Annual European iGaming Congress and Expo

19-21 October 2010 Bella Center, Copenhagen

Convergence, expansion, consolidation – take your business to new levels at the largest iGaming conference in the world

35 of the Power 50 • 150+ CEOs • 1500+ attendees • 30 hours of sessions • 90+ speakers 70+ exhibition stands Reg • 24 hour networking to a ister n o t EiG is your one place in the year where you will: • Find local partners, like media companies, lotteries and skill/casual games operators, to expand successfully into new emerging markets, such as France, Latin America and the USA

Acc tend E w Bou elerat iG e jis, Lon in don

• Secure the leadership of your brand in the increasingly competitive B2C and B2B marketplace, where B2C goes B2B, offline goes online and mainstream media goes gambling • Discover innovative products and novel ideas and differentiate your proposition from your competitors • Meet and benchmark best practice with the iGaming leaders and with iGaming start-ups – define the future of YOUR business • Maintain a strong position via geographical expansion and M&A so that you emerge as a winner from imminent consolidation in the marketplace. Learn from future defining speakers, including:

Simon Burridge, CEO, Virgin Games

H.C. Madsen, CEO, Danske Spil

Nicolas Beraud, CEO, Mangas Gaming

Mor Weizer, CEO, Playtech

Olivier Ou Ramdane, General Director, EurosportBet

Plus get a head start on your competitors by schmoozing with key iGaming industry players even before you arrive to Copenhagen – at EiG Accelerate, pre-EiG networking party open to all delegates registered for EiG by 15 September.

Organised by

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e-Management: Your Partner in Business While e-Management has been active in the e-gaming industry since 1997, the corporate services provider has continued to register more success, in terms of its operations, client base and service portfolio. A year since joining as Head of Marketing; CGI caught up with Jonathan Dalli for a quick Q&A session. CGI: What is e-Management’s background to the online gaming industry? Jonathan: e-Management is a dedicated business division of HBM Group (est. 1991), with offices in various reputable jurisdictions. It is effectively the brand we use to position ourselves as a leading turnkey provider of Business Support & Corporate Services to the Online Gaming Industry. We are known as one of the industry pioneers in setting up, maintaining and licensing e-Gaming companies for renowned operators around the globe. CGI: Can you give us an outline of your service portfolio and your business philosophy? Jonathan: Our services offer both experienced and well-known large operators, as well as start-up e-Gaming clients in emerging markets alike; the necessary solutions to complement their business, enabling them to focus on their core business whilst their corporate, tax and compliance structure is being taken care of. Our corporate philosophy is built on our vast experience as “partner in business” to our clients. We apply such philosophy to our entire client base, from each continent of the world! They are all assisted by our qualified and experienced Account Managers, who adhere to a very professional and responsive approach, and who maneuver in a high-pace real-time environment. CGI: Can you outline the most noticeable achievements during the past year? Jonathan: We have continued to diversify our business offering, noting a renewed interest in Curaçao from where we started. We are also based in Malta, in the heart of the Mediterranean, and as such jurisdiction has a number of competitive advantages, we have also moved to bigger, better and more central offices. We were present in a number of leading conferences, such as EiG, iGaming Asia, ICE, WGB, iGaming SuperShow and EGR Live amongst others. Also, our CEO, Herman Behr, was recently elected to the Board of Directors of the Interactive Gaming Council. Finally, we won the ‘Corporate Services Provider of the Year’ Award at the EGR B2B Awards, for our long-standing ability to bring innovative corporate solutions to our clients, servicing multiple jurisdictions under the same brand name. JONATHAN DALLI

Jonathan joined e-Management/HBM Group after previously being Marketing Manager of a quad-play service provider in the Telecommunications Industry. He oversees all marketing activities and directs the group’s marketing campaigns, brand management strategies, marketing communications & media relations and strategic collaborations. Jonathan is a Marketing & Management Graduate, as well as a graduate from the Institute of Financial Services (UK). Email: jonathan@emanagement-group.com

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MALTA

AVOIDING WHIMS TO SEEK LONG TERM GROWTH

INTERVIEW WITH FRANÇOIS BRUST

Developing a company’s core competency, retaining market flexibility through cautious growth while honing product innovation, is a persistent and familiar challenge where markets are gradually seeking to establish regulatory norms for egaming. Adapting quickly to market changes and paying careful attention to client requirements and players’ evolving gaming interests is essential to establishing any market presence. Fostering an environment where creativity and outside-the-box thinking is encouraged and rewarded is a vital motivator for ultimate success.

GI: Has the course of the industry turned out as you expected?

FB: When we first started operating in the online gaming sector 12 years ago it was very much a 'grey market'. Nobody had any experience in this industry other than the experience drawn from land-based operations and general, yet unrelated, ecommerce. The industry saw a boom similar to the dot-com bubble covering roughly 1995-2000. The market was embraced by people from a wide variety of backgrounds and experience. Everyone, of course, wanted a piece of the action and many failed along the way. But the industry is no longer the 'wild-west' industry it was seen as back then. Our industry is consolidating and the market is now dominated by well established high profile companies. We have never been a show-off company, so to speak: Being low-key is a deliberate corporate policy for us. It's about quality, not quantity. Being a 'small' company with less than 50 employees we have always had the benefit of flexibility that gives us by being able to adapt quickly to changes in the market. Casino games were our core competency when we started out in the online gaming industry and since then we have gained significant experience and confidence. Our strategy has always been to prioritise gradual longterm success with quality-assured services, rather than to jump on the bandwagon with any new whim in the market. Steadily, our product portfolio grew. Launching horse racing, for instance, is the natural evolution of that growth which has also enabled us to offer Casino & Gaming International I 57

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>> ANY UNREGULATED MARKET WILL EXPERIENCE A BOOM WHEN FINALLY REGULATED. WE'LL SEE A LOT OF FRENCH PLAYERS, PREVIOUSLY WARY OF PLAYING ONLINE, EMBRACING ONLINE GAMING. FRENCH BUDGET MINISTER FRANÇOIS BAROIN ONCE DESCRIBED THE ONLINE GAMING SECTOR AS "WILD AND ANARCHISTIC", WHICH ILLUSTRATES THE COMMON FRENCH VIEW OF OUR INDUSTRY. REGULATING THE INDUSTRY WILL CHANGE THIS VIEW, ALLOW PEOPLE TO ENJOY PLAYING WITHOUT DOUBTS AND FINALLY OPEN UP THIS STRATEGICALLY IMPORTANT EUROPEAN MARKET. >> protects them. The base layer of a site's safety level is the built-in encryption and protection offered by their primary software. CGI: More particularly, is there optimism that France will offer significant market growth? FB: Any unregulated market will experience a boom when finally it is regulated. We'll see a lot of French players, previously wary of playing online, embracing online gaming. French Budget Minister François Baroin once described the online gaming sector as "wild and anarchistic", which illustrates the common French view of our industry. Regulating the industry would change this view and allow people to enjoy playing without doubts or concerns and finally open up this strategically important European market. We have been looking forward to this for a long time and have consequently worked to ensure that B3W Group is compliant with l'Autorité de Régulation des Jeux en Ligne (ARJEL) rules. Our clients are preparing themselves to apply for French Agreements as well and, indeed, we look forward to Belgium following shortly. So however you look at this, regulation certainly has the potential to be the most transformative for our industry, despite being the most difficult to predict.

more services to our clients. Next year we will be adding betting and bingo as well with the expectation of offering our clients as much variety and choice as possible, especially as we establish a wider market presence. CGI: What key innovations have occurred and what part have you played in that development? FB: When we entered online gaming the offer was Javabased downloadable games. We were the first to develop Flash-based casino-games, although innovation for us is not purely a matter of being IT-based. We pride ourselves on creative games originality; and have built up a pretty extensive portfolio. Prioritising the regular release of new and exciting games not only ensures our clients will keep their players entertained, but it creates the sense of expectation for what will come next. Good software is about more than flashy graphics and high-speed game play. Good software not only entertains players - it 58 I Casino & Gaming International

CGI: Where do legislative issues regarding online gaming currently stand - in France especially and Europe generally - and what impact does it have for you? FB: Across the European Union there is a great deal of inconsistency as well as a fair amount of confusion about the legality of online gaming given that each member state is free to decide how they handle online gaming. There is no doubt that regulation is positive for our industry, allowing companies such as ours to find new customers and investors in markets that were previously inaccessible. It provides the players with a safe and secure leisure activity and combats the negative side-effects of the industry such as problem gaming and fraud. There is, however, a need for the European Commission to take action on a pan-European level, allowing fair competition for European-licensed operators. Member states which really have the protection of consumers at heart should introduce regimes based on cooperation between member states in the interest of the

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>> THERE IS A NEED FOR THE EUROPEAN COMMISSION TO TAKE ACTION ON A PAN-EUROPEAN LEVEL, ALLOWING FAIR COMPETITION FOR EUROPEAN-LICENSED OPERATORS. MEMBER STATES WHICH REALLY HAVE THE PROTECTION OF CONSUMERS AT HEART SHOULD INTRODUCE REGIMES BASED ON COOPERATION BETWEEN MEMBER STATES IN THE INTEREST OF THE CONSUMER. NO ONE IN OUR INDUSTRY IS HAPPY ABOUT THE PROSPECT OF POTENTIALLY MANAGING 27 DIFFERENT LICENCES! >> consumer. No one in our industry is happy about the prospect of potentially managing 27 different licences!

CGI: To create the ideal player environments what do you consider has to be taken into account?

CGI: Although, of course, you are licensed in Malta which presumably has additional advantages?

FB: The operator needs to know their players, both in terms of what motivates their play and the ways in which they actually play. The marketing strategy should be clearly defined and tools for proper CRM should be in place before launching any new site. We can then customise the games and design them to fit the profile of the client's target market. The aim is to create a great experience every time you touch the brand, and the design is a really big part of creating the experience and the emotion. We try to make a customer's experience better, but better in their terms.

FB: As the first European country to regulate remote gaming, Malta has the experience and reputation as a jurisdiction to give our clients peace of mind. We are happy to see the French market regulated, but we will still benefit from our Maltese licenses in the future. CGI: Do you think generating successful new game content is becoming increasingly difficult to achieve? FB: The only limitation to innovation is lack of creativity. We have always fostered an environment where creativity and outside-the-box thinking is encouraged and rewarded. Our developers have freedom and flexibility which enhances regular brain-storming sessions aimed at coming up with new and exciting aspects that can be added to the games. These days once groundbreaking software options like play automation features, customisable avatars, live dealers and hand histories are now standard and software designers are challenged to come up with new features. The way to achieve new and fresh game content is to encourage a creative environment where people feel comfortable in expressing their ideas and where constructive support is given in the development and analysis of those ideas.

CGI: Where do you see the industry going and what hopes do you have for future growth? FB: Regulatory issues are the most prevalent and that represents an important trend right now in the world of online gaming. Players want to have flexibility, to play where they want when they want. After all, at the end of the day, that is why it is called the world wide web. We expect to see the state-by-state approach eventually merge into regional/continental regulations, and the future hopefully holds a global approach to online gaming regulation. The room for future growth increases as more and more markets are being opened. We'll continue to diversify our business and steadily pursue our strategy of long-term success. CGI

CGI: Can you fulfil the demands of low cost and speed of product to market without sacrificing your quality? FB: Our new Poker Platform was developed in Romania. In our industry outsourcing ICT services to eastern European countries has been popular for a while now. We are also looking at India and the Philippines for future development of our poker platform. This strategy is chosen for its obvious effect on cost efficiency. We ensure quality through proper planning and communication of our specific requirements to the selected vendor. Testing is applied to different types of targets; in different stages or levels of work effort. These levels are distinguished typically by those roles that are best skilled to design and conduct the tests, and where techniques are most appropriate for testing at each level. It's important to ensure a balance of focus is retained across these different work efforts.

FRANĂ&#x2021;OIS BRUST Francis Brust, partner-founder B3W Group providing its technology platform to 11 online gaming brands has been in the igaming industry since 1998. His background before entering as one of the pioneers in igaming was as CEO and board-member in the broadcast, multimedia and IT industries. Francois and his wife enjoy their new life in Malta since relocating there in 2007. Besides constantly updating himself on the latest legislations and innovations in the industry, Francois is a passionate golfer. Casino & Gaming International I 59

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Compliance Requirements in Mergers and Acquisitions Current â&#x20AC;&#x2DC;liberalizationâ&#x20AC;&#x2122; developments in certain major European states are likely to cause a fundamental shake up in the on line gaming industry. Operators are already facing significant challenges and will have to look at a number of options to successfully overcome them. One such option could be to merge with or acquire existing licensed operators to facilitate entry to new markets, minimize costs and improve efficiency and throughput. In any merger and acquisition deal it will be important to consider the compliance requirements of the jurisdiction where the deal is to take place. This article focuses on compliance considerations resulting from the Remote Gaming Regulations in Malta. Whenever a Malta licensed operator is considering to merge, acquire or reconstruct the business in any manner that would result in a change in its shareholding structure it must first seek the approval of the Lotteries and Gaming Authority (LGA). Prior to effecting any changes in ownership the LGA should be informed of the new ownership structure going from the local company right up to the ultimate beneficial owners. The LGA needs to approve every new equity holder in the structure that has at least a 5% direct or indirect holding in the local licensed entity. Probity (due diligence) checks will be carried out similar to those made during a licence application process. The LGA normally requests a copy of the merger or acquisition agreement. It is important to ensure that the surviving entity post merger or acquisition has the necessary remote gaming licences to conduct the post transaction business operation. The licence issued by the LGA to an operator relates specifically to the activity and platform used by that operator. A fresh licence will be required if the surviving entity is to change such activity or platform. The local remote gaming licence is not assignable or transferable without the written prior consent of the LGA. Consequently particular attention needs to be had when an entity is acquiring the business assets or going concern of a local licenced entity rather than its shareholding. LGA consent is usually extended either through a transfer of the existing licence or the issue of a fresh licence to the surviving entity. These compliance issues are but one aspect of the M&A transaction â&#x20AC;&#x201C; an aspect however which has to be given careful consideration so as not to jeopardize the commercial prospect of the transaction. For further information readers are encouraged to contact the partner in charge of services provided to remote gaming clients, Maria Micallef, at maria.micallef@rsmmalta.com.mt

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Your international connectivity and co-location provider in Malta Vodafone offers dedicated IP bandwidth, point-to-point leased circuits and carrier grade co-location Vodafone guarantees 24x7 technical support, redundant international links and multiple carrier connectivity. vodafone.com.mt/bandwidth

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THE EU LANDSCAPE FOR REGULATION AND MARKET POTENTIAL

BY GEORGE MANGION

As member states of the European Union set out paths to online gambling regulation, state monopolies are adjusting to a liberalising market. The process has gradually led to countries recognising the gaming industryâ&#x20AC;&#x2122;s business legitimacy and revenue value, especially in current economic circumstances. Consequently, the pressure to adopt frameworks governing gaming expansion is meeting with uneven success. The trend, however, is unmistakably positive as we can see from this focus on The Netherlands, France, Italy, Estonia, Denmark, Poland, Sweden, Greece, Finland, Ireland and Malta.

ver the last decade the Internet has been used extensively as the distribution platform for online poker, casinos, and sport betting services, which has led to an amazing growth in the online gambling industry. Understandably, the legal landscape for online gambling is changing quickly, altering the shape of the pan-European market. Although several legislative and regulatory changes in online gambling have come to pass in recent months, European Union (EU) member states are still not uniform in their approach. The willingness to go a major step further and consider addressing online gaming regulations on a European level, as opposed to nation-by-nation, has given the political discussion a new impetus. Gambling activities were traditionally regulated at a national level to protect consumers from addiction, fraud and money laundering. The exclusion of gaming activities from the scope of the EU's Service Directive in 2006 triggered numerous complaints from the operators of the gaming industry concerning cross-border access. Subsequently, a number of European Court of Justice (ECJ) rulings were issued with several European infringement procedures against member states dealing with the question whether national measures limiting cross-border supply of online gaming services comply with Article 49 of the EU Treaty. One case recently, heard before the ECJ, was Betfair v the Dutch Government. Technically, online gambling by Dutch residents is allowed as long as the Internet sites are hosted in the Netherlands. But the Government did not issue any licenses for online casinos, online poker and online bingo, so there are no licensed websites in the Netherlands. The site toto.nl, which is run by De Lotto, is the only legal website for online sports betting in the Netherlands.

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IN 2008, INDIVIDUALS WERE ARRESTED [IN GREECE] BECAUSE THEY TOOK PART IN SPORTS BETTING ACTIVITIES IN A STANLEYBET STORE, ALTHOUGH THE COMPANY IS A FULLY LICENSED EU OPERATOR. THE EU HAS SAID THAT THE GREEK RESTRICTIONS ARE UNLAWFUL, BUT SINCE THE INCIDENT IN 2008 NOTHING HAS REALLY HAPPENED. BY THE BEGINNING OF 2010 SOME MEMBERS OF THE EUROPEAN PARLIAMENT’S PETITIONS COMMITTEE ALONG WITH OTHERS EXPRESSED THEIR FRUSTRATION ABOUT THE INACTION OF THE EUROPEAN COMMISSION: “WHAT ARE WE WAITING FOR? WHY IS THE COMMISSION NOT DOING ANYTHING?” SAID SIMON BUSUTTIL MEP (MALTA). >> In 2009 Betfair, one of the leading online betting companies based in the UK, started legal action against the Dutch Government and wants to offer games of chance through the Internet. The company is unable to get a license because Dutch gambling law only issues one license for a single operator in the relevant gambling sector. Two main points criticised by Betfair in the submission concerned the transparency of the licensing process and the continuous extension of the term of existing licenses. According to the ruling of the ECJ of 3rd June 2010, any online offering other than the current monopoly of De Lotto can be restricted. Even if foreign operators are licensed in other EU countries, like Betfair in the UK, the Dutch

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Government can restrict online gambling to the state’s monopoly until there is a harmonised online gaming law within the EU: “[...] the court observes that, in the light of the specific features associated with the provision of games of chance via the Internet, the restriction on the freedom to provide services may be regarded as justified by the objective of combating fraud and crime.” Concerning the single-operator licensing scheme in the Netherlands, the ECJ said that EU member states have sufficient discretion to determine the level of protection in respect of games of chance. The ruling of the ECJ serves as guidance for the Dutch court which has to reach a final decision in the case expected towards the end of 2010.

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>> FINANCE MINISTER TONIO FENECH SAID THAT 2010 WAS LIKELY TO BE ANOTHER RECORD YEAR IN TERMS OF INVESTMENT FROM THE IGAMING INDUSTRY, WHICH HAS BECOME ONE OF THE MOST IMPORTANT SECTORS IN THE MALTESE ECONOMY. “THE COUNTRY IS REGARDED AS BEING ONE OF THE MAIN INTERNATIONAL HUBS THAT REGULATES REMOTE GAMING EFFECTIVELY AND RESPONSIBLY,” HE SAID. >> In contrast to the gambling monopoly in the Netherlands, France and Italy have started to liberalise their markets. France has recently opened up its gambling market to a 'controlled liberalisation' process, based on strict licensing conditions. On 6th April 2010, the Parliament of France passed the bill to end state monopoly of online gambling and allowed privately owned websites to offer bets on football, poker and horse racing. With the new legislation the French online gambling revenue could reach €1.25bn by 2012 and around 50 companies are expected to apply for up to between one and three licences in France. The Autorite de Regulation des Jeux en Ligne (ARJEL) – the French authority for the regulation of online gambling – remains in charge of the distribution of licenses and remains also responsible for the fight against online gambling addiction and illegal websites. Following a complaint from Malta, the new French online gaming law has hit a last-minute delay. While online sport and horse racing bets will be opened up in the second week of June, online poker regulations have been postponed to July. So far, this means 15 betting sites can now operate legally. After three years of fighting to liberalise the domestic market in Italy, in June 2009 the government passed the Law No.77 which shall allow playing online fixed-odds games of chance, online poker and ring games legal. Italy has reached an agreement with the EU to open its doors to the rest of the world in 2010; that’s why it seems to be a booming year for the Internet gambling market. In the past European gambling operators could not offer online services in Italy. Furthermore, access to unlicensed web sites was effectively blocked from Italy. It is expected that the AAMS, the Italian gaming authority, will this year launch some new, albeit tight, regulation including how offshore online gambling sites will be regulated. Gross profits of all offshore operators will be taxed with a flat 20 percent, while licenses, which ended automatically at the end of June 2016, will cost €360,000. Furthermore, operators have to pay an extra of €50,000 if they want to offer online bingo games in Italy. Even Estonia has started to regulate and open up the online gaming market. On 1st January 2010 an online gaming law came into force in Estonia. The aim of the new law, which is based on a state-issued licenses system, is to regulate and protect local customers. Currently, there are just the three licensed companies – Olympic Entertainment Group, Alands Penningautomatforening and Triogames – that operate in the Estonian online gambling market. Essentially, a company is allowed to apply for a licence in Estonia if it has its seat in the EU and if it is in line with Estonian regulation. The Estonian Tax and Custom Board emphasised that illegal gambling will no longer be accepted in Estonia. In May 2010, the blacklist of foreign online gambling sites that will be blocked was

expanded to 300 companies by the Tax and Custom Board. It is expected that the Internet gambling market in Estonia will be opened up to all foreign investors in 2011. In 2009, Denmark took a big step forward and prepared draft legislation concerning sports betting, online as well as in shops, and online casinos and poker in order to partially liberalise the Danish gaming market. The new Law, which was introduced on 26th March 2010, is expected to come into force in January 2011. It will allow authorised firms to offer their services freely for the first time and will thereby open a newly regulated Danish online gaming market. Moreover, the licensed gambling operators will be protected with payment processing bans, ISP blocking and a ban on advertising for non-licensed operators. The implementation of these measures should strengthen the new regulated gaming market and prevent non-licensed operators from attracting customers. Contrary to Denmark, Estonia, France and Italy which have at least started to partially open up their online gambling markets, Poland introduced a very controversial ban. Even so, it has recognised the potential of an appropriately taxed online gaming market and has, therefore, faced a lot of trouble from its citizens, foreign online betting companies and, some predict, also from the ECJ. On 1st January this year, Poland introduced new legislation which squarely forbids all gaming outside of government-approved casinos including slot machines, and bans all gambling related advertising along with the imposition of higher taxes for gambling companies in Poland. Besides that it issued a gambling ban for anyone under 18 years of age. Legislation would eliminate around 20,000 slot machines in Poland over a period of five years and would increase at the same time the taxes from €180-€480 per month for ‘one-armed bandits’. In February 2010 the Polish Government drafted a bill to control the Internet websites used by Polish citizens, which is simply called 'net censorship'. But thousands of enraged Internet users signed a petition to preserve their freedom and finally the censorship plan has been abandoned. Even if the EU criticised the gaming monopolies of countries like Sweden, Finland and Greece they still protect them. In mainland Finland, there are three gaming state monopolies, Raha-automaattiyhdistys (Ray), Veikkaus Oy and Fintoto. In February 2010, Ray was approved by the Finnish parliament to launch online casino and online poker. Simultaneously, the Finnish state lottery Veikkaus Oy was approved to offer online bingo. The new licences of these two companies came into effect on 1st March 2010. Probably, Ray will launch a national, reliable and versatile Internet gaming site in the casino sector in August 2010. There are even a lot of foreign-based websites offering poker Casino & Gaming International I 65

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and casino games online in Finland. Most of these sites skirt around Finnish law because only the games offered by the three monopolies are legal. Greece’s betting monopoly, OPAP, which is one-third owned by the Government, is expected to strictly control its lotteries and sports betting until 2020. OPAP has an extensive monopoly and has not previously offered any online sports book in Greece. In 2008, the Greek state monopoly’s protection drew the European Commission’s attention. Applications for licenses to enter into the Greek gambling market by foreign operators, for example Stanleybet, were repeatedly rejected. In 2008, individuals were arrested because they took part in sports betting activities in a Stanleybet store, although the company is a fully licensed EU operator. The EU has said that the Greek restrictions are unlawful, but since the incident in 2008 nothing has really happened. By the beginning of 2010 some members of the European Parliament’s Petitions Committee along with others expressed their frustration about the inaction of the European Commission: “What are we waiting for? Why is the commission not doing anything?” said Simon Busuttil MEP (Malta). As often reported in the press during the last month, Greece has fallen into serious financial trouble and is now one of the poorest countries in the Euro Zone. In return for a €110bn bailout by the EU and International Monetary Fund (IMF), Greece has to prepare a privatisation plan by the end of 2010 to sell off state enterprises and assets and gain at least €3bn by 2013. In contrast to previous news, Greece will most probably not sell its 34 percent stake in the betting monopoly OPAP in 2010. The Government believes that the economic management of OPAP will bring significant revenues. They have sent signals that they are looking forward to opening up Internet betting, currently forbidden in Greece but which represents a potential estimated market value of €5bn, while the country however is struggling with a €310bn debt mountain. Ionnais Spanoudakis, CEO of OPAP, said that the process of opening up the online gambling market is expected to be completed by May 2011. For the draft law on online betting, the Italian and French laws will be used as a guide, he added. In Sweden, AB Svenska Spel (Svenska Spel), along with the Swedish horse racing organisation AB Trav och Galopp (ATG) and a public benefit organisation, have a complete monopoly over all kinds of gambling in Sweden. Since 2005 Svenska Spel has been entitled to introduce online poker in conjunction with the online gaming software provider Boss Media. Today, Sweden's online gambling portal offers everything from sports betting to poker, bingo, and lottery. The Swedish Government considers different opportunities, such as IP blocking, to prevent foreign gambling websites from reaching Swedish players. In the past the EU voiced criticism of the state-run monopoly, and as a result of a ruling by the ECJ, Sweden is keeping the online gaming monopoly while allowing foreign operators into the sports betting market. Svenska Spel will keep its online monopoly for online horse race wagering and all other types of gaming. The sports betting concession is set for implementation in 2011. Ireland’s attitude to this section is a huge contrast to Sweden, because all forms of gambling and betting are legal throughout the country. Until now, the Irish Government does not collect tax on most gambling wins, just on sports bets, at a rate of two percent. New plans are being 66 I Casino & Gaming International

considered so that the Government starts imposing taxes on any overseas gambling businesses that offer their services to Ireland’s domestic consumers. Funds collected from the new taxation would be applied to funding Ireland’s ailing horse racing industry. Due to its open, powerful and regulated market, Malta is seen as a role model by many other European countries. Malta was the first European country to recognise the potential and necessity of a common regulatory framework for online gaming within the EU. Malta has adopted specific regulations for its online gaming market in 2004 and due to the fact that Malta’s regulatory framework fully conforms with the fundamental principles of the EU Treaty, the island faces no complaints about infringement proceedings by the ECJ like a lot of other European jurisdictions. Finance Minister Tonio Fenech said that 2010 was likely to be another record year in terms of investment from the igaming industry, which has become one of the most important sectors in the Maltese economy. “The country is regarded as being one of the main international hubs that regulates remote gaming effectively and responsibly,” he said. The Maltese Lottery and Gaming Authority (LGA) has played a major role in the growth of igaming in Malta, which now has more than 250 remote gaming companies operating in the Mediterranean Island. The LGA issued around 350 remote gaming licences out of 600 applications in the past six years, 30 of them in the last year. There is positive growth in Malta with 5,200 people directly employed in the industry; around 3,400 in the remote gaming sector. Furthermore, the LGA ensures that gaming is fair and transparent for players and their major intention is to prevent crime, corruption, money laundering and protect minors and vulnerable players. Malta believes in the seriousness of the regulatory approach as well as the business-friendly measures such as a favourable tax regime. This means low taxation of gaming (0.5 percent on turnover), a low-tax onshore tax regime for gaming companies and a vast network of double taxation agreements. CGI

GEORGE MANGION George Mangion has over 30 years experience in accounting, taxation, financial and consultancy services. His efforts have seen that PKF Malta has been instrumental in establishing many ecommerce, online betting and gaming companies in Malta and has developed relationships with market leaders worldwide. George is a regular contributor to both local and foreign publications on business, igaming and ecommerce. He has also lectured and delivered presentations at numerous seminars and conferences worldwide; namely, in Europe, South Africa, Asia, North and South America, Australia and the Caribbean. Email: gmm@pkfmalta.com Tel: +356 21493041/Fax: +356 21484375

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DAVID VERSUS GOLIATH: WHY WE OPPOSE NEW LOCAL LICENSING REGIMES BY SONJA LINDENBERG

Online gambling regulations are currently at the centre of an intense and polarised debate in the European Union (EU) between those countries that favour state-based policies and prefer to introduce their own licensing regimes, and those who believe in an EU-wide harmonised solution and the freedom of the provision of services between member states. Malta, the EU’s smallest member state, is clearly spearheading the second group and many see this as a David vs. Goliath situation.

alta has, over the last decade, built up an impressive reputation in the online gaming industry and together with the UK is hosting the majority of online gaming operators in the EU. The country started licensing operators in 2000. Today, the Mediterranean Island is of the opinion that once an operator has been granted a licence in one EU member state, the operator should be able to operate freely throughout the European Union. Given the recent rulings by the European Court of Justice, and the decision that EU member states can restrict gambling services in order to protect the public interest and prevent gambling addiction or organised crime, operators will soon need to apply for multiple licences if they want to offer their games in different EU member states. Italy and France have such legislation in place and require operators to apply for licences in their countries. Malta has not given up on its position and has recently objected to the issuing of licences for gambling companies to operate in the French online market, delaying the distribution of the second round of licenses. The objections were filed under the confidentiality clause, meaning that these are not made public. But one of the elements purportedly under dispute is that the French law, which requires players to choose an operator that has a French licence for online poker, is being seen by Malta as contradicting EU regulations. Malta was also the only European Union member state to object to the Spanish EU presidency initiative to frame a common definition for “illegal gambling”. Even though Malta voiced some opposition, the EU competition ministers still agreed on a common position. Illegal gambling has now been defined as “gambling in which operators do not comply with the national law of the country where services are offered,

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provided those national laws are in compliance with EU treaty principles.” Malta stated that it could not agree to the definition of “illegal gambling” as proposed, for the simple reason that this will apply the concept of illegality to operators who may have been licensed by one of the member states and not by another. Competing against large countries is a battle Malta can win. Reuben Portanier, CEO of the Lotteries & Gaming Industry, has recently pointed out that in the end the industry will decide the best jurisdiction. Malta is confident that it has a good regulatory framework which protects the players and the operators. Maltese licences are issued to operators based in Malta with no restriction as to where they can offer their services deemed to be in compliance with EU regulations; while French licenses are issued for companies to operate in France only and Italian licences for Italy only. Moreover, a closer look at the licensing regimes of France and Italy reveals that the newly ‘liberalised’ markets may not be as liberal as they purport to be. Under the new Italian licensing regime, licenses will have to pay a huge fee of €360.000, and will automatically expire at the end of June 2016. Operators who wish to offer online bingo games in Italy will have to pay an extra €50,000. Startups or companies that come from a totally different business will need to release a €1.5m bank guarantee in favour of the Italian authority AAMS (Amministrazione Autonoma dei Monopoli di Stado – Autonomous Administration of the State Monopolies). Briefly, applying for a licence in Italy can end up being quite expensive. Compared to Malta’s operational scheme, Italy’s demand for centralisation and stringent technical requirements are the main issues for most operators. All online gambling services that companies provide to Italian players must be served through a dedicated platform, and must be linked to a central computer system operated by the Italian gaming authority. This system will monitor every wager placed by Italian players, and these wagers will be taxed in real time. On the other hand, operators licensed in Malta need to submit monthly reports to the Lotteries & Gaming Authority, which include a summary of all the monthly gaming transactions, bank statements of bank accounts that are related to the gaming activity and the tax computation for the month. Even if a permanent supervision does not take place one can still say that the Maltese regulations are strong and protect the reputation of the jurisdiction, the gaming industry that operates out of Malta as well as the players. In addition, in order to provide prompt and efficient dispute resolution, gaming operators in Malta have to retain detailed transaction and gaming records as well as give full access to the authority to these records as and when requested. Taxation is the problem with France’s new licensing regime. Some of the most respected gaming companies have already decided not to secure a French licence mainly for tax reasons. France taxes the total amount bet as opposed to the revenue garnered by the gambling company. Taxation based on gross revenue such as is the law in Malta can be as low as 0.5 percent for some forms of online gaming or capped at a maximum monthly fee for casino operators. Given this standard, France's tax of 7.5 percent on betting and 2 percent on poker is relatively high and this could make generating profit much more difficult. Although France is a big market, some of the big players stopped operating in the market due to the high costs of maintaining a license there. With such 68 I Casino & Gaming International

high set up costs it will be almost impossible for a start-up or an operation on a smaller scale to consider entry. In addition, online casino games such as roulette or slot machines, which are very lucrative, remain banned in France since they are considered too dangerous in light of maintaining public and social order; i.e. said to be too addictive though poker is licensed. Malta licenses all sorts of games; in fact, the regulations are technology and game neutral. They apply to all types of technologies (Internet, mobile, telephone, fax and game devices) and all types of games (Betting, P2P, Online Casino, Community Games, Leagues, etc.). These are definitely interesting times for the industry but before entering a new market operators clearly need to assess the environment. Jurisdictions should be chosen for their reputation, their infrastructure, their fiscal policy and their long-term commitment to the industry and all stakeholders. More than ever before, operators now need to think commercially when deciding where to set up their business if they want to provide services to a pan-EU market, relying on the legal framework does not seem to suffice. The main issue is whether a local licensing regime does better protect players. Malta does not think so. What France and Italy are doing is mainly increasing their revenues through the issuing of costly licences and collection of high taxes. Certainly, taxes and licence fees are important revenue for Malta too, but the regulations still allow operators to retain sufficient funds to build their business after paying taxes. However, there is hope for commercially thinking operators. After being considerably criticised, the Italian licensing regime now permits operators to locate their legal seat and equipment in any country of the European Economic Area, or in any other country that will enter into bilateral agreements with the Italian Gaming Authority. This means that operators will be obliged to pay Italian gaming taxes but are allowed to locate their business and pay corporate tax in jurisdictions such as Malta that offer a low cost base. Whereas both France and Italy tax companies with more than 30 percent, the corporate tax in Malta is much more competitive, and given certain conditions, can be as low as 5 percent. In addition, Malta has many years of experience and today the Island boasts specialists in all lines of services that gaming companies require, providing the best possible business environment for operators to thrive in. CGI

SONJA LINDENBERG Sonja Lindenberg is the Business Development and Marketing Manager of the Fenlex Group. The company provides corporate services such as accountancy and company administration to international clients and is specialised in the iGaming industry. Sonja has assisted a number of companies through the application process for an online gaming licence and has helped them set up operations in Malta.

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We have been building our gaming expertise since the inception of remote gaming in Malta 11 years ago. We offer an end-to-end business solution, from licence application to on-going administrative and operational support. We strive to establish long term relationships with the iGaming community. Our range of services will allow you the freedom to focus on the core processes of your operation. Working closely with Fenech & Fenech Advocates, one of Maltaâ&#x20AC;&#x2122;s largest ODZ Ă&#x20AC;UPV ZLWK ZKRP ZH DUH DVVRFLDWHG ZH offer a very personal and hands on service.

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Ukash - Casino and Gaming Ukash, the global e-money network, has rapidly established itself as the fastest growing online cash payments company in the world with more than 420,000 physical points of purchase in 33 countries across six continents. From starting out solely as a voucher-based method for people to spend their cash online, Ukash is now creating an holistic range of products and services. In particular, Ukash is developing concepts that provide complete flexibility - allowing consumers to obtain and use their e-money in a wide variety of ways, on a wide variety of different platforms, for a variety of different purposes. This evolution, together with rapid geographic diversification, has enabled the Ukash offering to become a truly ubiquitous e-money proposition. As Paul Coxhill, Ukash Marketing Director, says, “The demand for Ukash grows by the day across an increasingly diverse range of geographies, sectors and merchants. This brings opportunities for innovation in both how we enable consumers to obtain their Ukash vouchers as well as in how we enable our partners to leverage our platform to reach new consumer groups with new solutions.” With the launch of Ukash PayOut, a new product which the company promises will shake-up the gaming industry by offering instant payouts to all players with 0% processing costs to operators or customers, Ukash has responded to a particular challenge raised by many gaming operators – namely, how to simply and efficiently distribute winnings. Ukash has successfully operated in the gaming sector for many years across numerous different global territories. The primary function for Ukash historically has been facilitating ‘cash-in’ to gaming sites, which has introduced the lucrative cash consumer to operators. Additionally, Ukash has also allowed for prepaid cards and, increasingly, popular e-wallets such as Neteller to be loaded with cash, providing online gamers with far greater flexibility. By creating Ukash PayOut the company has completed the circle and now offers a 360 degree solution for online gaming operators and consumers alike. Ukash PayOut is the latest in a growing line of exciting products to be developed by Ukash, and the company believes it will transform the way players and operators manage their winnings. Smart Voucher, the holding company of Ukash, has operated a white-label cash-in and payout solution with William Hill for many years and Ukash has more recently launched its new PayOut solution through 2 existing redemption partners, UB.com and Absolute Poker. Feedback from consumers suggests that the convenience of withdrawing funds instantly has been a major advantage of the new product. Industry feedback sees Ukash PayOut providing an opportunity to enable operators to benefit from reduced overheads while enhancing their consumer experience by providing a solution that makes withdrawing funds easy. The new product, which is live now, simply pays out a Ukash voucher instantly regardless of the deposit method used. The company says that the new product will mark the end of costly cheques, bank transfers and other traditional payment methods as it provides operators with an instant pay out option at the lowest available cost. Head of Betting and Gaming, Tyrone Perry, said, “The international gaming market is an important part of our business and we believe that in Ukash PayOut we have a product that can truly revolutionise the way payments are made to players.

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Offering an instant, convenient and easy to use product at a lower price than competitors is a magic combination. It will also help to increase player conversion, loyalty and retention, so we are expecting Ukash PayOut to be in high demand.” Asked whether Ukash had a particular focus on the gaming sector, Coxhill said, “Our goal is to be the leading provider of e-cash payments in all sectors. In particular, the gaming sector has been and continues to be hugely important to our business. However, rather than focussing on one market we are strengthening our product line to generate growth across our entire business. We can now operate in a wide-range of sectors, in numerous geographical locations, on different platforms and with a growing number of partners, which means that the company is now stronger, as well as nimble; something that is attractive to both partners and the end user.” Headquartered in the UK and regulated by the Financial Services Authority (FSA), Ukash has grown dramatically over the last few years and particularly the last 18 months. Major developments have included its launch into Australasia and North and South America, while the company’s presence in its core European market has also continued to grow. Ukash has traditionally had a strong presence within the VoIP, financial wallets and gaming sectors, as well as online games and virtual currencies, and the company’s priority now is to build on its expertise and existing partnerships to leverage greater market share. Working with major brands such as Ladbrokes, PokerStars and Skype, the Ukash proposition has become increasingly popular internationally, and is now considered one of the world’s leading alternative payment mechanisms. As Ukash provides consumers with a convenient, flexible and secure way of spending cash online, it has traditionally been popular with the underbanked, those that wish to spend discretely and people with fears regarding online identity theft. However, due to the rapid evolution of the payments industry and the ongoing challenge of creating robust ways of monetising new platforms, the Ukash proposition is becoming increasingly relevant to a wider audience. Using its sophisticated payments systems, Ukash is able to develop payment methods that can tie-in with the latest trends in consumer spending. The emergence of micro-payments for example, which are becoming more mainstream largely due to the creation of News International’s ‘Paywall’, are leading customers to seek the most convenient method of payment, and Ukash is well placed to service that need. Likewise the continued development of Mobile Commerce brings another opportunity for innovative companies to target certain consumer groups with m-site or mobile wallet payment options. Coxhill explained, “Ukash has always had the vision of being the world leader in electronic cash-payment transactions and empowering everybody, anywhere in the world, to maximise the functionality of their cash. Our evolution from singlepurpose cash payments provider to a more universal online cash management solution takes the company closer to achieving these goals.” You can learn more about Ukash at www.ukash.com and gaming operators can visit www.ukashbusiness.com/payout or email david@ukash.com for more information on Ukash PayOut. Built on Macromedia Flash and therefore accessible to any user, Juliet offers a range of innovative features not possible in a conventional HTML-based interface. For optimum speed and stability, processing power is derived not from the server, but from the client PC. To optimise security and ease of use, the system provides online bookmakers with a complete suite of advanced riskmanagement tools, to monitor all aspects of exposures, manage market prices, open, close, settle, and create new markets, dynamically adjust bet delays, and monitor high bets.

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All data is collated and provided in real time, and is accessed through an ergonomically designed user interface. Added performance and security are provided by the fact that the server element of the solution runs independently of the web site server, connecting to it and exchanging information solely on a need-only basis. At the same time, all system components use a tuple (customer, player, and password) to identify messages and data objects, while advanced sets of algorithms suggest new prices for all markets based on current scores and time elapsed. READY INTEGRATION A further option for both new and existing operators when adopting Juliet is provided by Parspro ppTOTO, which since its release in 2001 has served as one of the industry‘s leading sportsbook platforms. Flexible, dynamic and highly secure, ppTOTO enables online sportsbook operators to control their site remotely from any location, while allowing Parspro to readily add new features as they become available. Features include a core betting server, full administration tool and back office suite, robust database and advanced risk management, as well as a betting page in the operator’s language of choice with two default languages included, limitless choice of currency, and complete page design by Parspro if required. Built like all Parspro products on a solid foundation of scalability, extendibility, robustness, fault-tolerance, and a rapid transaction engine, ppTOTO provides operators with complete administrative control of every aspect of their operations, including full management of active games, payout plans, results, winning selections, actual payout, and general settings. Comprehensive in design, ppTOTO stores and collates information on sales and payouts for every possible result in every game, thereby providing an extremely high level of risk management. Whenever sales on a single outcome are greater than a predefined limit, odds are automatically recalculated, a feature that can also be triggered manually by the administrator. “Ready, willing and very able” Shortly after Juliet’s introduction at last September’s EiG Expo in Copenhagen, Parspro announced that a future release of the system currently in development will enable a network to be created in which multiple site operators can pool their players, thereby increasing liquidity and offering larger prizes. “One of the most striking trends of recent times has been the spectacular growth in popularity of live sports betting, with latest figures from a number of leading sports book operators suggesting that it now accounts for the majority of all profits,” continues Hafsteinsson. “As a result, growing numbers of online poker and casino operators are seeking to secure a share of this potentially lucrative market by adding live sports betting to their portfolios, and Parspro is ready, willing and more than able to help them to do so. “By adopting Juliet, the potential for attracting new players to sites is limited only by the operator’s own imagination,” concludes Parspro marketing director Thorvar Hafsteinsson.

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PAYMENT STRATEGIES

THE NEXT ‘BIG CYCLE’ WILL KEEP YOU THINKING ON YOUR FEET INTERVIEW WITH SIMON WESTBURY

From startup to international operator, the progress of achieving a robust market position in payment processing currently benefits from the continuing fluidity of egaming. But to take advantage of the enormous innovative potential it offers operators always comes back to how concrete are the core practices of building trust, establishing global networks and knowing your customers. Newly regulated and emerging markets challenge those capabilities as operators’ services and support have to adapt to supply these markets. Combining those requirements adds up to a winning formula.

GI: How did you come to promote your payment system and services to the egaming industry?

SW: As with every start-up we grew organically, marketing the company through ourselves, our staff. We did not have a massive budget to launch a flash marketing campaign so we used our connections in the industry to spread our message and gain our first merchants. As you know, this industry is all about trust and word of mouth: Merchants soon learnt that we could be trusted and began coming to us directly and through a global network of resellers that we developed. With the message out there and the business doing well, we decided to start using industry conferences and exhibitions in order to announce ourselves to those parts of the industry that we had not previously reached. In our first year we were holding meetings in the sidelines of conferences, but we are now increasing our presence at industry conferences and find ICE, EiG and the Global Gaming Executive Summit the most useful of all the events to attend. We are delighted to be working with the majority of the industry’s top 100 gaming sites and we have ongoing discussions with those organisations that we are not currently working with. CGI: Can you explain your payment system and its position among the range of systems in operation today? SW: As an International Payment Service Provider, we have a payment solution totally adapted for the online gaming industry. We own our own Gateway, are PCI Level 1 certified and specialise in High Risk processing. We have a very strong relationship with some of the biggest casinos in the world, but we are continuously looking to add to our portfolio. Apart from Casino & Gaming International I 75

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PAYMENT STRATEGIES

>> THERE ARE DISTINCT ADVANTAGES TO WORKING IN GAMING: IT IS STILL A YOUNG INDUSTRY AND ALTHOUGH WE HAVE GONE THROUGH MANY CYCLES, ITS FLUID NATURE IS A DISTINCT BENEFIT. FOR EXAMPLE, IF WE LOOK AT THE NEXT “BIG CYCLE” – NEWLY REGULATED AND EMERGING MARKETS – THIS OFFERS US A GREAT CHALLENGE AS WE WILL HAVE TO WORK WITH NEW CARD TYPES, CURRENCIES AND ADAPT OUR SERVICES AND SUPPORT TO SUCCESSFULLY SUPPLY THESE MARKETS. IT IS ALSO AN ADVANTAGE BECAUSE IT ALLOWS US TO GROW AS A COMPANY, MEANING THAT WE ARE CONSTANTLY THINKING ON OUR FEET AND MOVING FORWARD TO MEET THE DEMANDS OF EGAMING OPERATORS AND ONLINE GAMERS THEMSELVES. >>

specialising in gambling, we can process for any other sector of activities via our commercial offices in the UK and France and our Technical and Development team based in Denmark. Our resellers and commercial centres are in many other countries and we aim to offer a strong international service wherever you are. CGI: What payment methods are most effective in your experience?

adapt our services and support to successfully supply these markets. It is also an advantage because it allows us to grow as a company, meaning that we are constantly thinking on our feet and moving forward to meet the demands of egaming operators and online gamers themselves. CGI: Perhaps there are strengths in egaming that you see fitting well with how you evolve and the business intelligence gained that make up your innovations?

SW: Without wishing to sound as if I am dodging the question, every payment method has its own place and time. We started with pure credit card processing and have now expanded into using e-wallets and pre-paid cards. It’s about working with the egaming merchant and the player to act as the middle man enabling the player to enjoy their experience of the online casino, whilst allowing egaming sites to know your customer and thereby gain maximum revenues.

SW: As I say, its young and fluid nature sits well with our ethos. Our company is young and full of talented minds that are all pulling in the same direction. No challenge is too daunting or too small for our team.

CGI: Given the stiff competition, do you feel it has proven correct to enter this market?

SW: It has been a benefit for us as we have adapted to market conditions, tweaking our product to manage the expectations of our clients and meet their needs. Therefore, where others have faltered and fallen by the wayside, we have grown. The small providers that have come and gone have allowed us to swallow their market share through our unparalleled customer service and word of mouth. We are now in the nice position where clients are coming to us as they have heard how good our product is.

SW: Yes, our business has been growing year-on-year and we are now looking to expand into emerging and newly regulated markets. CGI: Has this consequently become a significant and successful part of your operations? SW: Although we process gaming, adult and pharmacy, gaming currently provides us with the majority of our processing given that this is where the expertise of our staff lies. However, going forward, we intend to grow the adult and pharmacy side to match the gaming revenues that we process. CGI: Are there distinct advantages for you in this sector or do you find the needs and requirements are much the same as any other industry? SW: There are distinct advantages to working in gaming: it is still a young industry and although we have gone through many cycles, its fluid nature is a distinct benefit. For example, if we look at the next “big cycle” – newly regulated and emerging markets – this offers us a great challenge as we will have to work with new card types, currencies and 76 I Casino & Gaming International

CGI: There has been a high level of service interruptions this year from smaller providers coming and going. Is that a problem or a benefit over the longer term in your view?

CGI: Is the current financial climate becoming a challenge to your competitive edge, or instead actually helping to drive your business forward? SW: The current financial climate is a challenge and an opportunity to drive our business forward. As you said in your previous question many service interruptions have occurred this year, some of these have been down to the international financial climate. However, we have embraced the challenge and worked with our global network of suppliers and merchants to move our service forward and increase our processing revenues. CGI: Interestingly, of course, you operate via England, France and Denmark. Is that a fruitful arrangement that helps you with the egaming world?

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PAYMENT STRATEGIES

>> WITHOUT DOUBT PAYMENT SYSTEMS ARE INTEGRATING AND GLOBALISING IN LINE WITH THE DEVELOPMENTS THAT ARE TAKING PLACE IN THE INDUSTRY AS A WHOLE. HOWEVER, THERE WILL ALWAYS BE LOCAL AND REGIONAL DIFFERENCES AND THIS IS ONE OF THE REASONS WHY WE HAVE OPENED AN OFFICE IN THE BALTICS. PLAYERS IN EACH COUNTRY AND REGION HAVE THEIR OWN IDIOSYNCRASIES, SO WE HAVE TO BE ABLE TO SERVICE THEM AND RESPOND TO THE GAMING OPERATORS’ REQUIREMENTS IN EACH REGION. FOR EXAMPLE, IN LATIN AMERICA OPERATORS FACE HIGH TAXES IF THEY REMOVE THE MONEY FROM THE REGION BUT NEED TO PROCESS IN LOCAL CURRENCIES. SO IT IS UP TO US TO HELP THE EGAMING OPERATOR MAXIMISE THEIR REVENUES BUT ALLOW THE PLAYER IN THAT REGION TO HAVE A CULTURALLY RELEVANT GAMING EXPERIENCE. >> SW: It does help us as a company, I am not sure it can be said it helps in the egaming world due to the nature of the French and Danish online gaming markets. However, being a PanEuropean company with a new office in the Baltic’s we are expanding to ensure that we are in situ to exploit market opportunities as they arise. Our company meetings can be quite interesting, due to the cultural differences in our natures. Nevertheless, we normally come together in agreement and the right decision is reached more often than not. CGI: Equally, are you keen to grow in emerging markets? SW: We see emerging markets as the main avenue for growth; newly regulated markets and emerging markets which I see slightly differently. Obviously, emerging markets such as Italy do give some idea of how operators are going to expand once countries like France are regulated. We have clearly seen the moves that operators such as Ladbrokes made in France and the successful B2G stance that Playtech have employed. We are very much driven by these developments and we will be happy to assist operators as they expand into these markets. Of course, there will be challenges, as we saw when Ladbrokes and William Hill launched their bricks n’ mortar joint ventures in Italy and Spain respectively. CGI: What significance did EiG have for you (Copenhagen, September 2009)? SW: EiG, along with ICE and the Global Gaming Executive Summit are the main conferences and exhibitions that we use. EiG 2009 was particularly successful for us: we not only gained new merchants but also expanded our banking relationships forming a new partnership that has really allowed us to push our business forward. CGI: Some consider payment systems are integrating and globalising; but still, would you say that there are enduring local and regional differences in what systems are used? SW: Without doubt payment systems are integrating and

globalising in line with the developments that are taking place in the industry as a whole. However, there will always be local and regional differences and this is one of the reasons why we have opened an office in the Baltics. Players in each country and region have their own idiosyncrasies, so we have to be able to service them and respond to the gaming operators’ requirements in each region. For example, in Latin America operators face high taxes if they remove the money from the region but need to process in local currencies. So it is up to us to help the egaming operator maximise their revenues but allow the player in that region to have a culturally relevant gaming experience. CGI: How is innovation vital to market leadership and to what extent does that apply to egaming in particular? SW: Innovation is intrinsic to the egaming market – new games, new player experiences; we saw the development of 3D poker a few years ago even though not all operators agree that it was a good idea. We have seen PKR go from strengthto-strength and develop a niche in the market. In addition, with the smoking ban in the UK, we have seen a boom in online bingo in Britain as well as in-play betting expanding beyond all recognition. In fact, innovation is the lifeblood of the industry, allowing it to expand and maximise liquidity. As new markets open I am sure we will see new innovations that will be relevant to players in these markets that we may not have seen up to this point. CGI: Presumably, since service efficiency is vital for players and operators, you pay a lot of attention to this? SW: Again, service efficiency is intrinsic to us, both for players and for the operator. We have to keep both sides happy; we need to keep the player correctly serviced to avoid charge backs and also because egaming is not like visiting an offline casino in Vegas or London, where they can touch and feel the experience. Service has to be efficient so the player feels that they are actually part of the gaming process. On the flip side, we need to service the gaming operator in order to keep and grow our client base. Casino & Gaming International I 77

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>> SERVICE EFFICIENCY IS INTRINSIC TO US, BOTH FOR PLAYERS AND FOR THE OPERATOR. WE HAVE TO KEEP BOTH SIDES HAPPY; WE NEED TO KEEP THE PLAYER CORRECTLY SERVICED TO AVOID CHARGE BACKS AND ALSO BECAUSE EGAMING IS NOT LIKE VISITING AN OFFLINE CASINO IN VEGAS OR LONDON, WHERE THEY CAN TOUCH AND FEEL THE EXPERIENCE. SERVICE HAS TO BE EFFICIENT SO THE PLAYER FEELS THAT THEY ARE ACTUALLY PART OF THE GAMING PROCESS. ON THE FLIP SIDE, WE NEED TO SERVICE THE GAMING OPERATOR IN ORDER TO KEEP AND GROW OUR CLIENT BASE. >> CGI: Does the impact of online fraud concern you given the growth of non-bank payment processing? SW: Online fraud is one of the damaging aspects of our business and again we work with operators and deploy extensive anti-fraud measures in addition to those measures that the operators have. However, we have to be realistic and understand that we will never totally eradicate fraud. Every time we advance our systems, someone will find a way to try and circumnavigate it, making this an ongoing game of catand-mouse. Even so, it’s a game that we feel we are winning. CGI: Are you one of those operators very cautious about risk in new growth markets in Asia, eastern Europe and South America SW: We are cautious about risk, but we balance risk against opportunity. Certainly, these markets do offer a great opportunity so we have moved our systems forward to cater for them and we have grown into these markets very aggressively. Up to this point that has been an excellent decision, but the key has been in the preparation. We did not rush into the market in order to chase quick money; we took a long term view and prepared fully for market expansion. That has proved successful and one of the main reasons that we have grown while some of the other processors have not lasted. CGI: As non-bank payment systems grow would you welcome greater regulation? SW: I never thought that I would welcome more regulation, but in this case I would cautiously encourage it. We play by the rules, but I am aware that some of our competitors use non-bank payment systems to stretch the rules to their limits and in some cases actually break them. That gives them an unfair competitive advantage and consequently is very frustrating for us. However, I do not wish to appear overly cautious. As we have seen with the banking crisis and the recent government plans in the UK to break up the FSA, regulation does not always work. But if the industry is consulted and actually listened to with some form of workable regulation coming into force, I would not object. By this I mean that as long as it empowers the online operator, processor and player, then I would be happy. CGI: Looking ahead, how do you see your payment system and the system generally evolving?

78 I Casino & Gaming International

SW: Our operation will continue to expand globally into newly regulated and emerging markets while reacting very positively to new innovations in online gaming. As I have mentioned, we have seen the development of 3D Poker, the growth of online bingo and in-play betting; and with exciting strategies such as B2G being adopted I am sure that there will be more innovations to which we will adapt. But how we will expand is the multi-million pound question since we do not know what the operators have in store just yet. There is also a very exciting development occurring at the moment which I cannot talk about due to legal restraints. However, I do envisage that this development will take us to the next level of payment processing and online banking. I do know that customer service for the online gaming operator and player will always be at the core of our business as it has always been. Our commitment to customer service has allowed us to grow to this point and we do not see any reason to change this winning formula. CGI

SIMON WESTBURY Simon Westbury is Commercial Director of UGS Pay Ltd, an International Payment Service Provider. Simon was previously Executive Director of the Gaming Executive Summit Europe (GES), Europe’s premiere annual forum for online and offline operators. GES is part of the Terrapinn group’s global gaming event portfolio and is regarded as one of the global forums for the industry, having already established itself within the Asian and Australian regions. Gaming Executive Summit Europe was launched in 2007 in collaboration with the event’s founding partner Deutsche Bank. The annual forum provides debate and direction from Europe’s leading operators and has over the last two years established itself as the industry defining event for the sector. Simon has lived and studied in Syria and the UAE where he gained a Masters in Middle East Politics from Exeter University and a Certificate of Oriental Studies from Aleppo University in Syria. Simon is also a keen cricketer and is a qualified level one ECB coach.

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MOBILE

THE NEW WORLD IS ABOUT TO COME OF AGE

BY CHARLES COHEN

Over the next couple of years leading operators suggest mobile egaming businesses will be generating huge revenues. They may well take the lead in parts of the world where the mobile phone itself is much more connected and widely available than the desktop computer. So as mobile providers compete with the desktop gambling companies in the same way that email competes with the regular mail, or planes compete with trains, how does the mobile market look and why all the excitement?

ome exciting things have been happening recently. The latest is the announcement in June that Cometa games, a mobile gambling company, has made its first annual profit. Another firm, similar to Cometa, also a privately held mobile casino operator, has also claimed to have begun generating cash. These are my competitors and I am, genuinely, delighted that they are doing well (so long as they don't do too well, naturally). The next breed-of-gaming businesses are flying the nest.

Itâ&#x20AC;&#x2122;s about time. Readers of this publication will have also seen an article by Matti Zinder, CEO of Spin3 (a subdivision of privately held egaming provider, Microgaming), "Market Shift: Poised for the Green Light" (CGI, Issue 2, 2010, pp 77-78). He's been in this game as long as anyone, so you would expect a little jaded caution, but that's not what you get: "There is nothing like the promise of a new market to get the industry buzzing", he wrote. He is only half right. Mobile gaming is not really a new market. The first mobile gambling companies began appearing around 2002. Since then there have been bright flashes from the likes of Phantom Fiber and Cecure Gaming, who collapsed into bankruptcy. Several big players in the online world had some spectacular flameouts with expensive and ill-conceived mobile 'extensions' to their products, leaving the field with their singed fingers muttering dark curses and promising never to return. On the other hand, Spin3, Cometa and others are doing well. We have just processed our 500,000,000th mobile gaming transaction from a customer base which is around Casino & Gaming International I 79

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800,000. The last 100,000,000 transactions took a lot less time than the first 400,000,000; about a quarter by my calculations. What is new, however, is that the mobile gaming market is not what any of us thought it would look like - not even when we floated on the Stock Market four years ago. The way things are shaping up there is a real possibility that this is going to be much, much bigger than the desktop PC gaming business. The catalyst for this change is one device: the iPhone. Before the iPhone, the typical top of the line mobile was a telephone with gadgets, such as a camera, added on. You could tell that it was meant to be seen, used and understood

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as a phone because half of the thing was taken up with a phone keypad. What else could it be, other than a calculator? But a phone is a phone is a phone. Millions of people wanted them and differentiation was key to the marketing of new devices. Since they couldn't compete on the phone-ness of their mobiles, the manufacturers started competing on the gadgets - principally, cameras - since about 2006/7. Tellingly, the really fancy camera phones started to appear with removable memory card slots. And why not? Users were more than happy to store the pictures in the phone until they could get to a computer and download them in full megapixel glory. It seemed like a perfectly normal thing to expect to have to do.

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>> THIS IS THE REALLY EXCITING THING FOR ME...THE MOBILE EGAMING MARKET PLACE IS A COMPLETELY NEW THING. IT'S NOT JUST THE DESKTOP WORLD DETACHED FROM THE DESK; IT'S THE SMARTPHONE AND THE TABLET. IT'S EVERYTHING YOU DO WHEN YOU ARE NOT AT YOUR DESK, OR, EVEN AT THE SAME TIME. YOU COULD SAY THAT WE MOBILE PROVIDERS COMPETE WITH THE DESKTOP GAMBLING COMPANIES IN THE SAME WAY THAT EMAIL COMPETES WITH THE REGULAR MAIL, OR PLANES COMPETE WITH TRAINS. >> And so it was that the brightest analysts forecast global market shares for camera phones in the billions over the coming decade, and worried for the future of the digital camera itself. Things didn't quite turn out that way, and it took an outsider - a computer company, no less - to spoil everyone's party. Appleâ&#x20AC;&#x2122;s iPhone was not the first "Smartphone" or even the first phone to have a touch screen. It wasn't even the first phone you could use with iTunes (Appleâ&#x20AC;&#x2122;s online music store for iPod users); that was a best-forgotten Motorola phone. What it was, and remains, is the first phone that ordinary consumers fell in love with because it helped them do what they were already doing in a way that made sense. Not that this was inevitable. Initially, Apple saw their device as an iPod with a SIM card. There was no App Store. It wasn't even 3G. The camera was hopeless. In fact, the iPhone was a slow burner and didn't really come into its own until the 3G version came out in 2008. The true difference between the iPhone 3G (the first grown up device in the line) and the traditional cameraphone was the fact that the iPhone is an internet device with a phone application in it, rather than the other way around. The iPhone doesn't have a memory card because it doesn't need it: why store pictures when you can tap to upload them right there and then to Flickr, or your own blog? It turns out that this is what consumers really wanted and they were more than happy to pay for it. The point of the smartphone is that phone calls are a side benefit. Maps, apps, games, music, film, snapshots, email, text, IM - these are the features people are using. They want mobile devices which enable them to do these things more conveniently. The idea of going back to your computer to upload your pictures to the web now is just bizarre. Mobile network operators have also found to their chagrin that these applications are just as important as the camera, and (horror) that consumers won't countenance paying for the data traffic they consume. They have been forced now to pre-load these monsters onto the phones themselves. The rules are simple now: no Facebook, no sale. Remember that this has all happened in less than three years: a profound change in the way people live, work and socialise. It's all very hard to comprehend for anyone over the age of about twenty, but we have to try. The scale of it all is eye watering; in 2007, there were half a million "tweets" a quarter. In the last quarter of 2009, there were over two billion. Twitter just made a big acquisition by the way - of the company which had created one of the most popular Twitter apps for iPhone. So if you still don't believe me, go and sit in your nearest cafe for an hour and watch the mobiles. Watch

them being used for everything other than talking. If you don't get it after that, then you are beyond help, and I am sorry for you. All this is fertile territory for the companies like mine, Spin3, Cometa and so on who are building the next generation of remote gaming businesses on mobile. We are learning what consumers want from mobile gambling services, how to recruit and retain them, and what particular challenges there are in doing so profitably. We are also acclimatised to the technology challenges and the brutal pace of innovation in the mobile world, which is daily creating new services and platforms which we either have to work with or be brought down by. In mobile, speed is everything. This is a real time business. The relatively leisurely pace at which desktop developers function would crush you in the mobile world. Here's a flavour of what we are up against: The replacement cycle for mobile devices is about three years. That means, any generation of phones lasts that long before there are enough of them to consider that generation redundant. Currently, we are tracking support for over 8,000 different types of mobile phone that use the Java software system. We are now tracking over 1,000 which use the new Google Android system, not to mention being on the fourth generation of iPhone now. There are no standards in mobile. If you want to compete, you have to be able to work across a multitude of incompatible platforms. The cost of maintaining a large portfolio of products can be enormous unless you are geared up for it. I'm certain that one of the mistakes made by the early entrants into this arena is that they didn't realise the volatility until it was too late. By the time your developers had ported your apps to the top mobile phones, got those apps tested and approved by the regulators, and brought them to market, those very phones were so far down the league table your chances of making a return on that investment were close to zero. Much of my time is spent talking to investors and equity analysts not just about our business, but also the market itself. According to them, the risk for companies like ours has always been that, once mobile reaches viability, the "big boys" of the online world would push us out. After all, the argument goes, they've got the resources and surely it can't be that hard to convert an online casino to work on mobile? Actually it is. In fact, the very technology and social trends which have made the iPhone, the Google Android platform, and other smartphones take off are not just making it hard for online operators to adapt to the mobile world. I think they are making it nigh on impossible, and probably unnecessary. The world of consumer electronics is dividing into Casino & Gaming International I 81

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mobile devices, powered by mobile operating systems, and static devices, powered by desktop operating software (such as Windows). Desktop software is designed for computers with big memories, lots of storage, a keyboard/mouse and (ideally) a power cable attached to the wall. If your mobile had the battery life of your laptop, you'd throw it away. The software that powers online gaming today is all designed for the desktop. It even uses the primary means of desktop computer communication, the email, for customer contact. It relies upon a galaxy of technology and infrastructure that is built in to the desktop Internet (such as SSL encryption, cookies, Flash) that are either not present or just damned flaky on mobile. Millions of dollars have been invested in gaming platforms which, well, won't work on mobile. This is new. No one anticipated it. Not even Microsoft. They are the kings of the desktop. Yet their attempts at creating a mobile operating system have flopped. Twice. The reason is they just didn't get it. This failure is hard to explain, but it's not because they are stupid - far from it, it's a failure of imagination. Even a powerful phone like an iPhone or Nokia N95 has a processor with less power than some remote control mice. And then there's the iPad. Here is a device with a screen like a laptop, but no disk drive, no keyboard, no mouse. It has GPS, WiFi and SIM - it's a computer for convenience. It can do most of the things which most of us do most of the time with a laptop - but without the need to recharge every few hours. The reason it can do all these things is that it is modelled on the mobile phone, to meet the expectations of the "always connected" lives we now want to lead. Most importantly, the iPad (and competitor devices using Google 82 I Casino & Gaming International

Android or Chrome) all run on mobile operating system software. It's part of the mobile future, not the desktop past: Cheaper, better, more beautiful; what's not to like? And this is the really exciting thing for me. It means that the mobile egaming market place is a completely new thing. It's not just the desktop world detached from the desk; it's the smartphone and the tablet. It's everything you do when you are not at your desk, or, even at the same time. You could say that we mobile providers compete with the desktop gambling companies in the same way that email competes with the regular mail, or planes compete with trains. The first point to take in is that mobile egaming services are not going to replace desktop egaming. They are going to expand the whole marketplace and have a distinct place in it. It happens a lot in other areas. Innovations like email or air travel increased the amount of communication/travel which people did. It wasn't like the telegraph killing the pony express; or the digital camera killing the film camera. Those were a straightforward substitution of a better product. This is accretive. The second point is that success in the desktop world could be a positive hindrance to success in the mobile world particularly if companies feel that they have a position and investment to defend. Their cost structures, their business cultures and their speed rating are all tuned to the demands of desktop services. Faced with the real time world of mobile those systems and processes simply cannot compete. The big question, I suppose, is not "If" but "When". Over the next couple of years I think you are going to see mobile egaming businesses generating not just small revenues but huge revenues. You are going to see mobile egaming take the lead in parts of the world where the mobile phone itself is much more connected and widely available than the desktop computer. Mobile is the future. Enjoy. CGI

CHARLES COHEN After graduating from Oxford University in 1992 with a degree in Politics, Philosophy and Economics, Charles Cohen worked first as political assistant to Rt. Hon. Robert (now Lord) Maclennan MP in the House of Commons. In 1994, he was recruited to create a new technology division of Band & Brown Communications, a public relations firm in London. Then in 1998, he conceived and founded beenz.com INC, an Internet currency programme. By mid-2001, beenz.com was valued at $300m and had raised $90m in private equity. Originally chief technology officer, Charles became chief executive officer of beenz.com in 2000. The business was sold privately in 2001 to a US corporation. In 2002, his first book, "Corporate Vices" - an analysis of corporate cultures at the end of the 1990's - was published by Wiley Capstone. He was also elected a Fellow of the Royal Society of Arts. Charles co-founded Probability plc with John Scaife in 2003.

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JUDGES COULD LOSE THEIR CLOTHES AND WALK HOME IN A BARREL BY JOE KELLY AND FRANK CATANIA

For the US, poker judicial decisions were an 'annus horribilis'. Unlike the US, Internet poker has been regulated and licensed in European countries, such as France, Italy and Britain or by a government monopoly as in Sweden, and might also soon become licensed in countries such as Denmark. But in the US, Internet regulation in the near future would seem to be a highly improbable possibility.

“The State argues that poker is not a game of skill but is a game of pure chance or luck. This allegation is a canard. Anyone familiar with even the barest rudiments of the game knows better. Pure luck? Send a neophyte player to a Saturday night poker game with seasoned players and he will leave his clothes behind and walk home in a barrel.... The court should take judicial notice that poker is a game of skill. It cannot be gainsaid, of course, that there is an element of luck in poker.... There is an element of luck in everything in life. Even the prosecution of a lawsuit contains an element of luck.” he above quote was from the dissenting opinion in State of Illinois, v. Mitchell (1983 III. App. LEXIS 1393; at § 11-12), where the appellate court affirmed a trial court's conviction of poker players. Unfortunately for poker players, this dissenting analysis has remained the minority view in judicial opinions. Poker advocates had little to be cheerful about either in land-based or Internet developments in 2009-2010; and two US state appellate courts concluded that poker is either a game where chance predominates over skill or is illegal for some reason other than express statutory prohibition. In Pennsylvania and Colorado, respective state appellate courts reversed trial court rulings that Texas Hold'em was not illegal. The prosecutors appealed the trial court's determination of the legal issue primarily because of the concern that it would result in statewide poker games. Perhaps the most important example of judicial poker prohibition would be Commonwealth of Pennsylvania v. Dent (2009 Pa. Dist. & Cnty. Dec. LEXIS 146, rev'd by 2010 Pa. Super. LEXIS 76 (Pa. Super. Ct., 2010), appeal to Pa. Supreme Court filed 26th April 2010). In Dent, a Texas Hold'em dealer and a player were charged with violating Pennsylvania's

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>> ATTORNEYS FOR DEFENDANTS IN THEIR PETITION FOR SUPREME COURT REVIEW...WERE ESPECIALLY CRITICAL OF THE RELIANCE ON THE JOKER CLUB COMMENT THAT "NO AMOUNT OF SKILL CAN CHANGE A DEUCE INTO AN ACE." THE PETITION SUGGESTED BY ANALOGY THAT "IN THE GAME OF SCRABBLE, IT IS TRUE THAT NO AMOUNT OF SKILL CAN TURN A 'Q' TILE INTO AN 'E', BUT THAT DOES NOT MEAN THAT CHANCE PREVAILS OVER SKILL IN SUCCESS AT SCRABBLE." >> gambling laws. Since there were no prior Pennsylvania decisions on the legality of poker, the trial court, on 14th January 2009, determined that the sole issue was whether Texas Hold'em was a game of skill and that "if skill predominates, [Texas Hold'em] is not gambling" (Trial court decision at*5). The court relied heavily on scholarly studies, which uniformly concluded that poker was a game in which skill predominated over chance. The appellate court (2-1), on 25th March 2010, overturned the trial court's determination notwithstanding its admission that neither Pennsylvania statutes nor case law "specifically addresses the legality of Texas Hold'em Poker" (appellate decision at*5). The appellate court based its reversal largely on a decision concerning video poker machines, Commonwealth v. Two Electronic Poker Game Machines, 465 A.2d 973, 977 (Pa. 1983), which involved minimal skill. The appellate court then analysed decisions from eight other states including Missouri (1911), Nevada (1919) and Utah (1928). Most important was judicial reliance on a North Carolina decision that upheld the illegality of poker, Joker Club, L.L.C. v. Hardin, 643 S.E.2d 626 (N.C. Ct. App. 2007) rev. den .N.C. 2008 LEXIS 59. In Joker Club, the trial court's seven-page memorandum contained detailed references to expert testimony concluding that poker was a skill game but also concluded it could not "determine the meaning of the term 'predominate' and thus the matter should be resolved by the legislature". On appeal, Joker Club affirmed the trial court's determination and concluded that "no amount of skill can change a deuce into an ace. Thus, the instrumentality for victory is not entirely in the player's hand" (Joker Club at 630). In Dent, the dissenting opinion would have affirmed the dismissal of criminal charges because the prosecutor failed to present any evidence that chance predominated over skill in Texas Hold'em and thus failed to establish a prima facie case. The attorneys for defendants in their Petition for Supreme Court review were critical of the reviewing court's reliance on older out-of-state cases that did not mention Texas Hold'em poker and were especially critical of the reliance on the Joker Club comment that "no amount of skill can change a deuce into an ace." The Petition suggested by analogy that "in the game of Scrabble, it is true that no amount of skill can turn a 'Q' tile into an 'E', but that does not mean that chance prevails over skill in success at Scrabble" (Petition at 20). In Colorado, Texas Hold'em players in an informal tournament were charged (People v. Raley, 08M2463) with illegal gambling in violation of Colorado statutes, which defined prohibited gambling as based "in part upon ... chance" (ยง 18-10-102). The accused relied on two defences: (1) that poker was a contest of skill and (2) that the game was "incidental to a bona fide social relationship" and thus 84 I Casino & Gaming International

permitted in Colorado. The prosecutor objected to the defendants' introduction of expert testimony that poker was a skill contest, especially since the game was a tournament. After a jury acquitted the players in January 2009, the prosecution appealed the ruling of the trial court for having permitted expert testimony that a poker tournament was a contest of skill since the issue "will likely arise in future cases" (Appellate Decision at 3). The appellate court reversed the trial decision (No: 09CV168, 4th August 2009), and concluded that since Texas Hold'em was "contingent 'in part' upon chance," it was prohibited by statute (Decision at 6) and the "tournament" status was irrelevant. The appellate court left unresolved whether Texas Hold'em "fell within the social gambling exception" (Decision at 7). On 22nd March 2010 the Colorado Supreme Court refused to review the appellate decision (2010 Colo. LEXIS 263). In South Carolina, unlike Pennsylvania and Colorado,Texas Hold'em players won a victory at the appellate level. In Chimento v. Town of Mt. Pleasant, (NO: 98045DB), Texas Hold'em players were found guilty on 19th February 2009, of violating state gambling laws, notwithstanding the court's conclusion, based partly on the uncontroverted testimony of expert witnesses, that poker was a skill game. The trial court based its decision largely on a state statute which prohibited card playing at a gaming house, although the poker game was played at a private residence. On appeal, the convictions were reversed (1st October 2009, NO: 2009-CP-10-001551) when the appellate court determined that South Carolina would apply the "predominant" or dominate factor test to the legality of poker. The court also stated that it was "not bound by the Attorney General's statement (2004 WL 235411) that poker is a game of chance" (Decision at 10). Since poker is not gambling, it was not played in a "gaming house," and thus, there was no illegal act. The court also found a section of South Carolina's statute that criminalised card playing at a "house used as a place of gaming" to be "unconstitutionally vague and overbroad" (Decision at 13-15). On 22nd December 2009 Henry McMaster, the state attorney -general ,appealed the case (CP-10-001551)directly to the state Supreme Court, alleging that the reviewing court had "erroneously applied the 'dominant factor' test" (Brief at 24) and stepped "into the shoes of the General Assembly by adding terms such as 'chance' or 'skill' when the legislature has made (it) clear that 'any game with cards or dice' when played for money or other consideration is forbidden." (Brief at 15).The Brief also cited several times the Joker Club comment that "no amount of skill can change a deuce into an ace" (at 13, 33), and occasionally referred to the private

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>> A TEXAS HOLD'EM DEALER AND A PLAYER WERE CHARGED WITH VIOLATING PENNSYLVANIA'S GAMBLING LAWS. SINCE THERE WERE NO PRIOR PENNSYLVANIA DECISIONS ON THE LEGALITY OF POKER, THE TRIAL COURT, ON 14TH JANUARY 2009, DETERMINED THAT THE SOLE ISSUE WAS WHETHER TEXAS HOLD'EM WAS A GAME OF SKILL AND THAT "IF SKILL PREDOMINATES, [TEXAS HOLD'EM] IS NOT GAMBLING." THE COURT RELIED HEAVILY ON SCHOLARLY STUDIES, WHICH UNIFORMLY CONCLUDED THAT POKER WAS A GAME IN WHICH SKILL residence as a virtual "casino" (at 11, 24). Interestingly, the Attorney General, as in the trial court opinion in Commonwealth v Dent, also cited the 11 Gaming Law Review, 190 (2007) article of Joseph Kelly, Zeeshan Dhar and Thibault Verbiest on"Poker and the Law: Is it a Game of Skill or Chance and Legally Does IT Matter?" (Brief at 34). Throughout the Brief, there are references to pre-Civil War South Carolina history, e.g. "One antebellum editor observed that gambling not only ruins the character, but also makes a person covet his neighbour's goods" (at 18). On 3rd May 2010, the players/respondents filed their "Final Brief " in opposition to the AG which cited detailed transcript testimony of expert witnesses and also stated "the overwhelming majority of United States jurisdictions have adopted the dominant factor test to determine if an activity is gambling" (Brief at 22). It is widely expected that the Supreme Court will review the case because it involves a

constitutional issue. Federal Internet legislation has not been helpful to poker players. On 13th October 2006, Congress enacted the Unlawful Internet Gambling Enforcement Act (UIGEA) which targeted illegal non-exempt gambling payment transactions to online gambling operators. The statutory language did not use the "predominate" test to define illegal gambling and the regulations, which came into effect on 1st June 2010, exempted skill games where chance was not a "significant factor" (73 Fed Reg. 69, 386). This definition probably excluded poker, since chance may be a significant factor. There is pending legislation that would legalise Internet poker at the federal level. On 6th August 2009, New Jersey Democratic Senator Robert Menendez introduced S.1597, entitled the "Internet Poker and Games of Skill Regulation, Consumer Protection and Enforcement Act of 2009". This 91page bill presently has no co-sponsors. In the10 months since

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the bill was introduced, it has not moved in the Senate, and it is doubtful that anything will happen without the active support of Senator Harry Reid, the Senate Majority leader. Poker players have equally little to celebrate at the state level. In Florida, Representative Joseph Abruzzo introduced in 2010 the "Internet Poker Consumer Protection and Revenue Generation Act (HB 1441) which would have legalised intrastate licensed interactive poker by licensed card rooms working with an experienced Internet gaming operator. The bill did not get out of committee largely because of 'filibuster' tactics and the fact that the Florida legislature only meets for a few months each year. Representative Abruzzo intends to reintroduce the bill when the legislature meets again in March 2011. In California, Senator Roderick Wright has amended his intrastate Internet poker bill (SB 1485) to allow up to three licensed poker hub operators and develop regulatory standards that would ensure the suitability, solvency and social responsibility of licensed operators. Operators would have to pay monthly at least 10 percent of gross revenue to the state, and poker players who participate in an unlicensed site would be committing a criminal offense. In the unlikely event the bill becomes law over the opposition of powerful tribal gaming interests, it would still take years to develop regulations for operator applicants and other matters. The bill was discussed in committee on 29th June 2010, but it failed to come to a vote and will probably remain dormant for the remainder of 2010. An Iowa bill, introduced in spring 2010, that would have legalised online intrastate poker, failed largely because of conservative opposition and the state's short legislative calendar. One bright spot might be the State of Washington, where playing online poker is considered a Class C felony. Lee Rousso, an attorney and a poker player, challenged this absurd law partly on the grounds that it interferes with Interstate Commerce, which only may be regulated by the federal government. The State appellate court had rejected his arguments (Rousso v. Washington, 2009 Wash App. LEXIS 732), but the highest state court agreed to hear his appeal and has heard oral argument (2009 Wash. Lexis 793). Perhaps the US is not alone in experiencing an "Annus Horribilis" for poker. On 20th May 2010 the Swiss Supreme Court (2C_694/2009) concluded that it was unclear whether Texas Hold'em was a game predominantly of skill and that international studies, including that of the Hambach law firm, were inconclusive as to whether skill is the predominant factor. In overturning an administrative court ruling that poker is a skill game, the Supreme Court opined: "Taking into account the goals of the federal law (tackling organised crime and money laundering as well as preventing adverse social consequences of gambling), it is the Supreme Court's view that to clarify certain forms of poker as a game of skill with neither clear scientific reasoning nor fresh guidance from the legislature would lead to an uncontrolled opening of the market." This decision would not only restrict Swiss poker tournaments to its casinos, but also would prohibit Internet offshore poker operators who targeted Swiss customers. (James Kilsby "Switzerland Readies Poker Crackdown after Skill Game Verdict", GamblingCompliance.com, 3rd June 2010). The Swiss decision reached a result similar to that of the Denmark Supreme Court. In July 2009, the Danish Court (3-2) concluded that poker should remain under control by 86 I Casino & Gaming International

the government largely because the public perceives it to be a game of chance. (Ben Moshinsky, "Supreme Court Ruling Propels Danish Poker Reform," GamblingCompliance.com, 10th July 2009). A Swedish appellate court reached a different result in May 2009 when it concluded that the sentences of convicted poker players should be reduced or dismissed because poker is a game in which skill predominates over chance. In Sweden Internet and land-based poker is a government monopoly of the state-owned gaming firm Svenska Spel. On 2nd July 2010, a Dutch appellate criminal court, relying on expert testimony, also ruled poker was a game of skill and therefore was not gambling, but the decision is expected to be appealed. Unlike the US, Internet poker has been regulated and licensed in European countries, such as France, Italy and Great Britain or by a government monopoly as in Sweden, and might also soon become licensed in countries such as Denmark. In the US, Internet regulation in the near future would seem to be a highly improbable possibility. CGI

JOE KELLY AND FRANK CATANIA Joseph M. Kelly, Ph.D., J.D., is a Professor of Business Law at State College at Buffalo, and an associate of the Catania Consulting Group of New Jersey, specialising in gaming matters. He is licensed to practice law in Illinois, Nevada and Wisconsin. Joe is co-editor of the Gaming Law Review and Economics, a leading gaming law journal. He is considered an expert in the field of gaming, having lectured on various gaming topics worldwide. His law review publications have been cited as authority by federal and state courts in the United States. Joe has been used as an expert witness for several gaming companies, the United States Virgin Islands Casino Control Commission, the South African Parliamentary Committee on Trade and Industry ,Antigua and Barbuda and as an expert on poker in the trial of R v Kelly (Gutshot)(2007) in Crown Court (London), UK. He was also the major speaker on poker law at the Barcelona conference of the International Association of Gaming Regulators in 2006 Frank Catania is a senior partner in Catania Gaming Consultants and the Law Firm of Catania Ehrlich & Suarez of New Jersey, both having extensive experience in gaming related matters. He is the former Director of the New Jersey Division of Gaming Enforcement, serves as an independent director of eCOGRA, Nevada Gold Casinos and Continent 8. He is a member and served as the first president of the International Masters of Gaming Law. Frank has been published on a wide variety of casino gaming and government-related topics in several national publications, regional newspapers, and trade publications. He was instrumental in drafting gaming regulations for several gaming jurisdictions. Frank has been an advocate for regulation of Internet gaming in the United States.

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ELEGANT SOLUTIONS: IS SOURCE CODE TESTING ALONE SUFFICIENT? BY ANDREW BEVERIDGE

The online gambling landscape is rapidly changing as nations - especially in Europe - move toward regulation rather than prohibition. In this evolving situation, with more sophisticated demands for real standards compliance, is mere source code testing of software sufficient, or is continuous, live outputbased monitoring a more comprehensive, practical and elegant solution?

he world's largest reservoir of online gamblers is undoubtedly resident in the United States; but the political uncertainties and confusion surrounding the legality of Internet gambling in that country have de facto handed the future development of the industry to European nations. These governments are setting the pace as egaming matures, creating large publicly listed companies with a genuine desire to operate to best practice standards within national laws. This scenario, allied to the practical obligations of membership of the European Union, and the prospect of another source of tax revenue for state coffers, has seen national governments move away from prohibitionary or monopolistic systems in favour of licensing and regulation. A similar trend appears to be developing in countries like Canada, Australia and a number of Asian nations, where regulation is becoming an imperative consideration for politicians. What all of this portends is a growing demand for more holistic standards and testing procedures to ensure comprehensive player protection and compliance with more sophisticated - and genuinely enforced - regulatory regimes. The question of whether traditional and naturally limited source code testing developed for the land industry is sufficient to meet these demands in a multi-billion dollar business is assuming ever greater relevance as the high-tech and dynamic online gambling industry moves forward. For the past 10 years or so, there has been a sometimes heated debate on how to effectively test online gambling systems. The traditional testing laboratories advocate the

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>> FOR THE PAST 10 YEARS OR SO, THERE HAS BEEN A SOMETIMES HEATED DEBATE ON HOW TO EFFECTIVELY TEST ONLINE GAMBLING SYSTEMS. THE TRADITIONAL TESTING LABORATORIES ADVOCATE THE 'SOURCE CODE' APPROACH THAT IS USED IN THE LAND-BASED ENVIRONMENT, BUT THIS IS INCREASINGLY OPEN TO ARGUMENT. MANY REGULATORS, AND INDEED MY OWN ORGANISATION, CONTEND THAT SYSTEMS SHOULD BE MORE COMPREHENSIVELY ASSESSED BY ANALYSING THE LIVE OUTPUT, A VIEW THAT IS IN GENERAL SUPPORTED BY THE AUDITING PROFESSION. MOST REPUTABLE NATIONAL LICENSING JURISDICTIONS NOW ACCEPT OUTPUT-BASED TESTING, AND THERE CAN BE LITTLE DOUBT THAT THIS METHOD IS FINDING INCREASING FAVOUR IN TERMS OF BOTH ITS EFFICACY AND PRACTICALITY. >> 'source code' approach that is used in the land-based environment, but this is increasingly open to argument. Many regulators, and indeed my own organisation, contend that systems should be more comprehensively assessed by analysing the live output, a view that is in general supported by the auditing profession. Most reputable national licensing jurisdictions now accept output-based testing, and there can be little doubt that this method is finding increasing favour in terms of both its efficacy and practicality. The primary objective for both testing methods is to ensure a fair gaming environment for online players. Beyond that, operators must verify that governments are receiving the right allocation of taxes, and that operators are performing in full compliance with all national standards and requirements across the full range of operational and business activity. The well-proven Total Gaming Transaction Review (TGTR) methodology used by us provides an ideal vehicle in our view to meet the more demanding requirements that the industry now faces. I will explore TGTR testing in the online gaming environment, starting with an examination of the differences between the traditional, land-based gaming environment and the online gambling milieu. LAND-BASED PLAY In the traditional land-based casino environment, a single game is typically installed and hard coded onto a fixed device. In this case, the random number generator (RNG) the key to computer-based casino games, whether realworld slot machines or online slots and table games - and the machine form a single, integrated unit of hardware that is sealed from the outside world. The RNG is a programme within the host computer's microprocessor that determines the randomness of a game whether it's the spin of a slot machine or the cards dealt or drawn in a hand of video poker, among other games. In order to assess the fairness of a game, regulators or the independent testing agencies that they hire, review the game's source code to ensure it operates as specified. The source code is the arrangement of instructions written by computer programmers, which is converted from a human88 I Casino & Gaming International

readable form into some kind of computer-executable form, and ultimately results in the executable programmes that make up the gaming software. Upon approval, the source code and console are locked and certification is awarded. Once the software is reviewed and burned into the EPROM chip of the gaming unit, it cannot be physically changed. EPROM is a special type of memory that retains its contents until exposed to ultraviolet light. After the game is certified, land-based game developers and software providers do not have access to the code unless an adjustment is required. This could include installing new graphics, or making changes in rules. Once the gaming machine is operational, changes to the games do not happen very often. In the event an adjustment is required, the source code testing process would be performed again. To minimise the chance that an operator could switch one EPROM chip for another, regulators have access to onsite surveillance cameras and officials from the Gaming Board and the testing agency should be present any time the hardware is unsealed. In addition, regulators usually require casinos to keep detailed records for any time the gaming machines are opened. By analysing the source code of the game in the landbased environment, regulators or the testing companies that they hire, can be confident that the game performs as specified. Source code testing has worked well in traditional gaming. ONLINE GAMING ENVIRONMENT Online gaming is a much more complex and dynamic environment. In this industry, the player is the only one with control over the hardware on which the games are being played, typically the player's personal computer. The gaming server, the computer that runs the game, is the most critical component in online gaming. In addition to housing the RNG, the gaming server links into a highly sophisticated transaction processor and controller that routes the millions of messages coming into the system each minute. The server provides each message with a response, creates a complete record of all messages (in and out), and generates summary information - all in real time.

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>> LEADING JURISDICTIONS LIKE THE UK, FRANCE, ISLE OF MAN, GIBRALTAR, KAHNAWAKE AND MALTA ALL RECOGNISE THE BENEFITS OF [THE TOTAL GAMING TRANSACTION REVIEW], AND ACCEPT THIS ADVANCED FORM OF OUTPUT-BASED TESTING TO ENSURE THAT THE ONLINE GAMES ON OFFER FROM THEIR RESPECTIVE LICENSEES ARE FAIR. CURRENTLY, WE ARE WORKING ON AN ONGOING BASIS WITH OVER 25 LEADING SOFTWARE PROVIDERS AND ALMOST 70 LEADING ONLINE GAMING OPERATORS. TO DATE, 13 SOFTWARE PROVIDERS HAVE ACHIEVED ACCREDITATION FOR THEIR SOFTWARE IN THE FORM OF OUR CERTIFIED SOFTWARE SEAL; WHILE 145 ONLINE GAMING SITES ARE ACCREDITED WITH THE SAFE AND FAIR SEAL. ACCREDITATION REMAINS OPEN TO ALL SOFTWARE COMPANIES, OPERATORS AND THEIR AFFILIATE PROGRAMMES. >> As with companies such as Microsoft, Oracle and Sun, gaming software providers invest large sums to develop and refine their proprietary server products - their core competitive advantage in the online gaming industry. In fact, the gaming server is the culmination of the intellectual property that is their primary asset. It's no secret that this information is closely guarded. In the online gaming environment, software developers work constantly to improve the end user's experience through speed and efficiencies, increase security and reduce maintenance costs by refining the servers. Unlike a traditional gaming machine, a network system has many more points of ongoing failure, which require constant monitoring and adjustments through regular system maintenance. This could include making upgrades to the system or games, installing a new security patch from an operating system vendor such as Microsoft or Sun, fixing a bug or restoring a network fault. In the online gaming environment, technicians require access to the gaming server at all times. Because of the frequency of changes to the software in a live operating environment, source code testing, which verifies the software's performance only at a single point in time, is simply not suited to online gaming.

developed, implemented and maintained in a manner representative of best practice standards. The historical performance of the software will also be taken into account. The data analysis process does not begin until it is established by the auditors that the developer is consistently adhering to the appropriate standards. TGTR uses the fact that each casino can produce a record of every transaction over a period of time. This information permits a thorough analysis of every historical transaction for every game by the independent auditors, resulting in publicly available monthly payout percentage reports and bi-annual RNG reports. A continuous process, TGTR verification is based on actual transactions and actual game play irrespective of volumes, and can be applied during ongoing system changes and development. To verify the integrity of raw data and ensure that it has not been manipulated or corrupted in any way, the TGTR percentage payout review process requires the following: G

Recording of every single bet and payout transaction from each casino throughout the period of review directly onto dedicated servers (independent of the casino's gaming servers);

TOTAL GAMING TRANSACTION REVIEW TGTR is an advanced form of output-based testing that has been developed and optimised by independent auditors and the industry's leading software providers over the past decade or more specifically for the online gaming industry, and to determine the randomness of the RNG and verify payout percentages (the percentage of winnings to wagered amounts). Recognising the need to shift from traditional gaming testing in the more complex online gaming environment, TGTR was developed as a controls-based approach that focuses on data input and data output. TGTR is a continuous review that incorporates testing of the entire system rather than just a segment of the source code. The process starts with a thorough on-site inspection by independent auditors to ensure that software is being

Rigorous validation and balance checks of these transactions against the data on the casino's live gaming servers;

Final reconciliation of bet values and payouts against actual total players' account closing balances on the live gaming servers; and

Trend analysis regarding transaction volumes and player behaviour to provide assurance that the information appears reasonable and consistent.

By continually checking both the input and output of the system, it is feasible to test that the system is meeting regulatory requirements while providing operators and software developers with complete operational flexibility. It Casino & Gaming International I 89

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There are those who may argue that TGTR will only highlight a problem in the software after it has already occurred in a live environment. For this reason, we require a thorough ongoing review of the operating environment at the software provider and operator levels, and the controls and entire processes around the implementation and testing of changes to the software. This review ensures that the possibility of anything occurring which will adversely affect the output of the system is within acceptable limits. Overall, TGTR is a solution that allows for rapid advances in technology and regulatory demands, reduces development and regulatory costs, provides for easier dispute mediation and is easily implemented using existing methods from the broader commercial world. Leading jurisdictions like the UK, France, Isle of Man, Gibraltar, Kahnawake and Malta all recognise the benefits of TGTR, and accept this advanced form of output-based testing to ensure that the online games on offer from their respective licensees are fair. Currently, we are working on an ongoing basis with over 25 leading software providers and almost 70 leading online gaming operators. To date, 13 Software providers have achieved accreditation for their software in the form of our Certified Software seal; while 145 online gaming sites are accredited with the Safe and Fair seal. Accreditation remains open to all software companies, operators and their affiliate programmes. CGI is also possible to verify that all transactions have been accurately recorded by checking each transaction for its completeness, along with spot testing of transactions. In addition, the auditors ensure that wagering activity, including wins, is distributed among an acceptable population of players. Through further analysis of the summary data and subjecting the vast amounts of data to rigorous generally accepted statistical testing methods, one can further confirm the integrity of the RNG and of the system as a whole. Currently, we are working on an ongoing basis with over 25 leading software providers and almost 70 leading online gaming operators. 13 Software providers have achieved accreditation for their software in the form of the Certified Software seal. 145 online gaming sites are accredited with the Safe and Fair seal. Accreditation remains open to all software companies, operators and their affiliate programmes. CONCLUSION We view TGTR verification as a solution for the online gaming industry that goes far beyond trying to simply match the security of a real-world slot machine. We recognise that it's the fairness of the final outcome that is most important to the players, and the regulators who protect them. TGTR is enacted in our review and certification process once there is adequate assurance that full source code testing, implementation, version and change control are in place with the necessary security controls at the software provider, and all have been operating properly for a reasonable period of time. 90 I Casino & Gaming International

ANDREW BEVERIDGE Andrew qualified as a Chartered Accountant after completing articles at Coopers & Lybrand in Johannesburg. He spent six years abroad, working for major international banks in London and Hong Kong, including HSBC and ING Barings, and then completed a fulltime MBA at Edinburgh University. Andrew's online experience started in 1996 with MultiChoice, an international supplier of pay-TV and interactive services. He played a major role in the start-up of MWeb, South Africa's largest ISP, and then joined the management team of International Gaming Networks, the MultiChoice division created to develop interactive gaming technology across Internet and digital TV platforms. Other responsibilities included the implementation of the SuperBet's (South Africa's largest sports betting operation) risk management controls and procedures, and business development for the sports betting operation. Andrew then assumed responsibility for a company called LiveBet Online (Pty) Ltd, which, together with eCompany Ltd, was then able to develop a successful online and telephone lottery and sports betting platform that has been successfully implemented at various UK, European and South African sports betting operations. Accreditation remains open to all software companies and their operators. For more information, go to www.ecogra.org.

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COLOUR ATMOSPHERICS AND ITS IMPACT ON PLAYER BEHAVIOUR

BY MARK GRIFFITHS

Systematically researched evidence for the effects and role of colour in gambling environments has yet to be undertaken; but there are sufficient supportive studies that provide an insight into how that would likely affect the player's mood, emotion and behaviour. That, of course, has also to be seen as a design component in the gaming floor layout that helps shape player interest and attentiveness.

esearchers and those working in the gambling industry have been interested in the factors that lead to the acquisition, development and maintenance of gambling (e.g. Griffiths, 1995; Parke & Griffiths, 2007). Aside from individual differences, the combination of the situational characteristics of the environment, and the structural characteristics of the actual game being played have been highlighted as critical ingredients in determining these behaviours in relation to gambling (Griffiths & Parke 2003; Parke & Griffiths, 2006; 2007). This idea parallels with that of store designers who manipulate various features of the environment in shops to encourage purchase behaviour in consumers (Babin, Hardesty & Suter, 2003). Situational characteristics are typically those features of the environment that may encourage people to gamble in the first place, and in some cases to keep on gambling (Griffiths & Parke, 2003). Examples of such characteristics could include accessibility (e.g., the number of outlets or opportunities to gamble, membership rules); sensory factors (e.g., atmospherics, light, colour and sound effects); the use of advertising; access to other things (e.g., cash machines, alcohol, food); physical comfort (e.g., seating, temperature); and social facilitation (the presence or absence of other people in the vicinity). These are often acquisition factors and are often important in the initial decision for an individual to gamble (Griffiths, 1999). Structural characteristics are features of the game itself that can contribute to the development and maintenance of gambling behaviour (Griffiths, 1993). These can be reinforcing to the player as they offer constant rewards. For instance, the 'aura' of a slot machine may offer excitement,

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arousal and tension in terms of its music, lights and colour. It has also been argued that slot machines contain more gambling inducing structural characteristics than all other forms of gambling (Griffiths, 1995) and may be important factors in explaining why they tend to be more problematic than many other types of gambling. One characteristic that can impact on both a situational and structural level in gambling is colour. For instance, this can be manipulated and/or adapted in terms of the design of a slot machine or scratch card, an Internet gambling website, or the dĂŠcor and ambience of a gambling environment. In commercial environments, research has shown that desire to stay in a commercial (i.e., shopping) environment is positively associated with layout and dĂŠcor (Wakefield & Baker, 1998). Other features of the commercial environment have been studied including textures (Miller, 1993), design and layout (McCann, 2000; Robson, 1999), lighting (Gorman, 1997; Block, 1998), aromas (Miller, 1991; 1993), music (Oakes, 2000; Matilla & Wirtz, 2001), and employee uniforms (Hall, 1998; Barhite, 2000). However, much less is known about gaming environments. A number of studies have been carried out examining

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the subject of casino atmospherics from the perspective of slot machine players (e.g., Mayer, Johnson, Hu & Chen, 1998). Leisure services (like gaming) usually want the player to spend longer amounts of time in the venue (Turley & Fugate, 1992) because the longer that they are in there, the more money they will spend (Johnson, Mayer & Champaner, 2004). According to Mayer and Johnson (2003), casino operators have a number of aims. These are to get customers into the casino, maximise the overall gaming experience and keep players in the venue, and to get repeat patronage. The first aim can be achieved through such things as advertising, loyalty schemes and 'word of mouth' referrals. The second and third aims depend on many factors including the type of accommodation, the types of game offered, the opportunities to win, restaurant quality, customer-staff interactions, and casino 'atmosphere'. From the player's perspective, Mayer and Johnson argue that 'atmosphere' (including colour) may be the most difficult to understand. Friedman (2000) has arguably conducted the most research on casino environments and his findings show that

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after location, interior design is the most important variable in increasing or decreasing the effect of the location. Friedman argues that casino design influences the decision of whether or not customers who are staying at competing properties will choose to play at another casino. His view on casinos is that design encompasses many features including the interior architectural dimensions, décor, game arrangement, traffic-flow pattern, focal points, lighting and signage. From a financial perspective, Friedman found that short line of sight, a maze-type layout, and tightly packed congested gaming areas created higher player counts than those casinos with more spacious layouts. Mayer and Johnson's (2003) findings suggest that casino atmosphere may be a much narrower construct than previous conceptualisations with floor layout and theme appearing to be the most important to players. Other studies (e.g., Wakefield & Blodgett, 1994; 1996; 1999) have also reported that casino floor layout is an important factor in how players perceive the casino atmosphere. A study by Mayer, Johnson, Hu and Chen (1998) reported that a casino's atmosphere (which was a composite of casino theme, décor, lighting, noise levels, and smoke

effects) had the most influence on player satisfaction. A follow up study by Johnson, Mayer and Champaner (2004) examined casino atmospherics from a player perspective. The man-made physical surroundings of service settings have been referred to as 'servicescapes' (Bitner. 1992). Servicescapes comprise three important aspects, (i) ambient conditions (e.g., décor, theme, lighting, colour, noise, temperature, architecture, etc.), (ii) spatial layout and functionality (e.g., the way that seats, entrances, exits, etc. are arranged, i.e., the 'built' environment), and (iii) signs, symbols, and artefacts (Bitner, 1992; Lucas, 2003). Satisfaction with servicescape may also influence repeat patronage (Wakefield & Bodgett, 1994; 1996; 1999) although satisfaction with servicescape appears to have a stronger effect on players' desire to stay than on repeat patronage (Wakefield & Blodgett, 1996). Lucas (2003) found that certain aspects of casino atmosphere were significantly related to player satisfaction including interior décor, navigation (i.e., floor layout), cleanliness, and seating comfort. Johnson, Mayer and Champaner (2004) examined ten elements of casino atmosphere (theme, décor, noise level, colour, ceiling

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>> A RECENT EXPERIMENTAL INVESTIGATION REPORTED THE FIRST EVER EMPIRICAL STUDY INTO THE COMBINED EFFECTS OF BOTH MUSIC AND LIGHTING COLOUR ON GAMBLING BEHAVIOUR. WHILE PLAYING AN ONLINE VERSION OF ROULETTE, PARTICIPANTS TOOK PART IN ONE OF FOUR EXPERIMENTAL CONDITIONS...[IT] REPORTED [THAT THERE WAS] A SIGNIFICANT INTERACTION BETWEEN LIGHT AND MUSIC FOR BETTING SPEED, AND THAT THE SPEED AT WHICH PARTICIPANTS GAMBLED WAS INCREASED WHILE PLAYING UNDER RED LIGHT AND FAST TEMPO MUSIC. >> height, lighting, temperature, floor layout, employee uniforms, and smell). Using factor analysis, five factors emerged (theme/décor, noise level, ceiling height, floor layout and employee uniform). Only three of these were significantly related to player satisfaction (theme/décor, employee uniform, and noise level in that order, i.e., theme/décor being the most important variable). Overall, Johnson et al (2004) concluded there was a direct linkage between atmospheric elements of casinos and player satisfaction - at least in slot machine players. Research more specifically into the psychology of colour has been somewhat controversial in how it affects individual emotions (Singh, 2006). The majority of the research conducted has been into the colours red and blue. Birren (1978) said that this was because red and blue were the most preferred colours. The majority of literature in the colour psychology field has come from advertising and marketing papers. This is because they are interested in colour selection in the way that it may facilitate the sale of their products (Grossman & Wisenblit, 1999). It has been speculated that learning about consumers' emotional reactions to colour can be a useful predictor of purchase behaviour. This is because certain colours can provoke a particular positive or negative reaction (Routland, 1993). Red has consistently been found to be stronger, more exciting, and more arousing than blue (Pride & Ferell, 2003; Wilson, 2003; Yoto, Katsurra et al, 2007; Ueda et al, 2004; Birren, 1978; Bellizzi & Hite, 1992; Valdez & Mehrabian, 1994). This concept has been applied in a variety of situations in an attempt to manipulate people's behaviours. An example of this includes getting people to make quick decisions (Birren, 1978), stimulating appetites (Gorn, Chattopadhyaya, Yi & Dahl, 1997), and exciting people whilst making them feel they are not wasting a lot of time in environments such as casinos (Singh, 2006). However, a lot of this evidence is anecdotal, as it is not based on any sort of controlled experimental design. Colour preference has been explained in terms of cultural significance and associative learning. It has been suggested that associations of colour that have been developed in the past have been forwarded as explanations of perceptions of colour today. For example, blue has been associated with night, dark and quiet (Lüscher, 1969). Warm colours, such as red, are used in order to attempt to arouse consumers such as in gambling environments (Griffiths & Swift, 1992). This idea is supported by the research of Bellizzi et al (1983). They found that participants viewed 94 I Casino & Gaming International

warm colours as more exciting than cool colours. The culture in which we live can also determine how we associate colours and the different meanings they may have (Kreitler & Kreitler, 1972; Singh, 2006). However, across cultures, red has predominantly been found to be the most effective in influencing human emotions (Aaker, Bener, Martinez & Garolear, 2001). Individual responses to colour have also been explained in relation to the arousal that they produce. It has been suggested that colours that are on the extreme ends of the colour spectrum (e.g., red and violet) generate greater arousal than those in-between (Wilson 1966). However, when red and blue have been compared in terms of their influences on arousal, differences have been found between them, with red producing greater cortical arousal (e.g. Ali, 1972). With regards to the gambling literature in this field there has been minimal research conducted looking at the impact of colour on gambling (Griffiths & Parke, 2003). Griffiths and Swift (1992) reported in an observational study of five English amusement arcades that the interiors were generally red or towards the red end of the colour spectrum. This observation appears to suggest that gaming venue designers make use of the principle of red light exciting whilst allowing "time to fly" when decorating interiors without the consumer necessarily being aware. Light and colour effects have developed in their sophistication over recent years and the gaming and casino industry have taken advantage of this when designing machines, games, and gaming venue interiors (Parke & Griffiths, 2006). Stark, Saunders and Wookey (1982) provide one of the few empirical contributions assessing the effects of coloured light on gambling behaviour. Their study found that compared to gambling under blue light, gambling under red light leads to more risks taken, higher stakes made, and more frequent bets. They suggested that because blue is less arousing it leads to slower performance, as their attention is not specially focused on the task. As red was highly arousing it caused participants to focus on the salient aspects resulting in faster bets. The arousing effects of red were speculated to increase overt behaviour. Similar types of research study have also been carried out on computer gaming. For instance, Wolfson and Case (2000) examined the effects of music and lighting on computer game play. It was found that red lighting led to participants underperforming in the latter games played, compared to blue, although initially both groups improved

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>> STARK, SAUNDERS AND WOOKEY PROVIDE ONE OF THE FEW EMPIRICAL CONTRIBUTIONS ASSESSING THE EFFECTS OF COLOURED LIGHT ON GAMBLING BEHAVIOUR. THEIR STUDY FOUND THAT COMPARED TO GAMBLING UNDER BLUE LIGHT, GAMBLING UNDER RED LIGHT LEADS TO MORE RISKS TAKEN, HIGHER STAKES MADE, AND MORE FREQUENT BETS. THEY SUGGESTED THAT BECAUSE BLUE IS LESS AROUSING IT LEADS TO SLOWER PERFORMANCE, AS THEIR ATTENTION IS NOT SPECIALLY FOCUSED ON THE TASK. AS RED WAS HIGHLY AROUSING IT CAUSED PARTICIPANTS TO FOCUS ON THE SALIENT ASPECTS RESULTING IN FASTER BETS. THE AROUSING EFFECTS OF RED WERE SPECULATED TO INCREASE OVERT BEHAVIOUR. >> continuously. The red group's heart rate also decreased in line with their decline in performance. This was explained in terms of red initially being more arousing, which led to higher concentration and less error rates than blue, but as time went on they became desensitised to its arousal. Sound volume in their study was not found to be influential in terms of its effects on participant's performance. A recent experimental investigation by Spenwyn, Barrett and Griffiths (2010) reported the first ever empirical study into the combined effects of both music and lighting colour on gambling behaviour. While playing an online version of roulette, participants took part in one of four experimental conditions; (1) gambling with fast tempo music under normal (white) light, (2) gambling with fast tempo music under red light, (3) gambling with slow tempo music under normal (white) light, and (4) gambling with slow tempo music under red light. Spenwyn, et al reported a significant interaction between light and music for betting speed, and that the speed at which participants gambled was increased while playing under red light and fast tempo music. The literature in this field stresses the importance of these ambient features due to their capacity to affect a player's level of arousal. However, as has been highlighted in this article, there has been a general lack of experimental research concerning the combined effects of environment features in terms of their effects on gambling behaviour and there is much psychological research that could be done in the area. It is clear that situational characteristics of gambling environments (including colour) appear to have the potential to play a role in the acquisition, development and maintenance of gambling behaviour. The success of the gambling establishment's situational and structural characteristics (where success is defined as an increase in gambling due to the situational or structural characteristic) depends upon the psycho-situational and/or psychostructural interaction (Griffiths & Parke, 2003). The importance of a characteristic approach to gambling is the possibility of pinpointing more accurately where an individual's psychological constitution is influencing gambling behaviour. Such an approach also allows for psychologically context specific explanations of gambling behaviour rather than explanations that focus solely on personality and individual differences. CGI

REFERENCES Aaker, J.L., Bent-Martinez, V. & Gorolera, A. (2001). Consumption symbols: A study of Japanese and Spanish brand personality constructs. Journal of Personality and Social Psychology, 81, 492508. Ali, M.R. (1972). Pattern of EEG revery under phonic stimulation by light of different colours. Electroencephalography and Clinical Neurophysiology, 33, 332-335. Babin, B.J., Hardesty, D.M., & Suter, T.A. (2003). Colour and shopping intentions: The intervening effect of price fairness and perceived affect. Journal of Business Research, 56, 541-551. Barhite, B. (2000). A uniformed decision. Hotel & Motel Management, November 6, 170-175. Bellizi, J., Crowley, A.E., & Hasty, R.W. (1983). The effects of colour in store design. Journal of Retailing, 59, 21-45. Bellizi, J. A. & Hite, R.E. (1992). Environmental colour, consumer feelings and purchase likelihood. Psychological Marketing, 9 (5), 347-363. Birren, F. (1978). Colour and human response. New York: Van Nostrand Reinhold Company. Bitner, M.J. (1992). Servicescapes: The impact of physical surroundings and employee responses. Journal of Marketing, 54, 57-71. Block, J. (1998). Lighting case study. Interiors, June, SS14-SS16. Friedman, B. (2000). Designing Casinos to Dominate the Competition. Reno, NV: Institute for the Study of Gambling and Commercial Gaming, University of Nevada. Gorman, J. 1997). Strategies for retail lighting. Interior Design, April 8, 88-91. Griffiths, M.D. (1993). Fruit machine gambling: The importance of structural characteristics. Journal of Gambling Studies, 9, 101-120. Griffiths, M.D. & Parke, J. (2003). The environmental psychology of gambling. In G. Reith (Ed), Gambling: Who wins? Who looses? pp. 277-292. New York: Prometheus Books. Griffiths, M.D. & Swift, G. (1992). The use of light and colour in gambling arcades: A pilot study. Society for the Study of Gambling Newsletter, 21, 16-22. Grossman, R. P., & Wisenblit, J. Z. (1999). What we know about consumers colour choices. Journal of Marketing Practice: Applied Marketing Science, 5 (3), 78-88. Hall, S. (1998). Uniforms should reflect functionality. Hotel & Motel Management, February 2, 49-50. Lucas, A.F. (2003). The determinants and effects of slot servicescape satisfaction in a Las Vegas hotel casino. Gaming Research and Review Journal, 7(10), 1-19. Casino & Gaming International I 95

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Johnson, L., Mayer, K. Champaner, E. (2004). A customer-based assessment of casino atmospherics. Gaming Research and Review Journal, 8(2), 1-10. Kreitler, H. & Kreitler, S. (1972). Psychology of the Arts. Durham, NC: Duke University Press. Lüscher, M. (1969). The Lüscher Color Test. New York: Random House. Matilla, A. & Wirtz, J. (2001). Congruency of sound and music as a driver of in-store evaluations and behavior. Journal of Retailing, 77, 273-289. McCann, J. (2000). Beds take center stage in room design. Hotel & Motel Management, November, 6, 160-162. Mayer, K. & Johnson, L. (2003). A customer-based assessment of casino atmospherics. Gaming Research and Review Journal, 7(1), 21-31. Mayer, K. & Johnson, L., Hu, C. & Chen, S. (1998). Gaming customer satisfaction: An exploratory study. Journal of Travel Research, 37, 178-183. Miller, C. (1991). Research reveals how marketers can win by a nose. Marketing News, January 18, 1-2. Miller, C. (1993). Scent as a marketing tool: Retailers - even casinos sense smell of success. Marketing News, January 18, 271-272. Oakes, S. (2000). The influence of the musicscape within service environments. Journal of Services Marketing, 51, 34-43. Parke, J. & Griffiths, M.D. (2006). The psychology of the fruit machine: The role of structural characteristics re-visited. International Journal of Mental Health and Addiction, 4, 151-179. Parke, J. & Griffiths, M.D. (2007). The role of structural characteristics in gambling. In G. Smith, D. Hodgins & R. Williams (Eds.), Research and Measurement Issues in Gambling Studies. pp.211-243. New York: Elsevier. Pride, W. & Ferrell, O.C. (2003). Marketing; Concepts and Strategies 12. Boston: Houghton Mifflin. Robson, S. (1999). Turning the tables. Cornell Hotel and Restaurant Administration Quarterly, 40(3), 56-63. Routland, R. C. (1993). What colours are your school supplies? Direct Marketing, March, 60-62. 96 I Casino & Gaming International

Singh. S. (2006). Impact of colour on marketing. Management Decision, 44, 783-789. Spenwyn, J., Barrett, D.K.R. & Griffiths, M.D. (2010). The role of lights and music in gambling behavior: An empirical pilot study. International Journal of Mental Health and Addiction, 8, 107-118. Stark, G.M., Saunders, D.M, & Wookey, P.E. (1982). Differential effects of red and blue coloured lighting on gambling behaviour. Current Psychological Research, 2, 95-99. Turley, L.W. & Fugate, D.L. (1992). The multidimensional nature of service facilities: Viewpoints and recommendations. Journal of Services Marketing, 6(3), 37-45. Ueda, Y., Hayashi, K., Kuroiwa, K., Miyoshi, N., Kashiba, H. & Takeda, D. (2004). Consciousness and recognition of five colours using Functional-MRI and brain wave measurements. Journal of International Soc Life Info Science, 22, 336-271. Valdez, P. & Mehrabian, A. (1994). Effects of colour on emotion. Journal of Experimental Psychology, 123 (4), 394-409. Wakefield, K. & Baker, J. (1998). Excitement at the mall: Determinant effects on shopping response. Journal of Retailing, 74(4), 515-539. Wakefield, K. & Blodgett, J.G. (1994). The importance of servicescapes in leisure service settings. Journal of Services Marketing, 8 (3), 66-76. Wakefield, K. & Blodgett, J.G. (1996). The effect of the servicescape on customer's behavioural intentions in leisure service settings. Journal of Services Marketing, 10(6), 45-61. Wakefield, K. & Blodgett, J.G. (1999).Customer response to intangible and tangible service factors. Psychology & Marketing, 16(1), 51-68. Wolfson, S., & Case, G. (2000). The effects of sound & colour on responses to a computer game. Interacting With Computers, 13, 183-192. Yoto, A., Katsuura, T., Iwanaga, K. & Shimomura, Y. (2007). Effects of object colour stimuli on human brain activities in perception and attention referred to EEG alpha band response. Journal of Physiological Anthropology, 26, 373-379.

MARK GRIFFITHS Dr Mark Griffiths is a Chartered Psychologist and Professor of Gambling Studies at the Nottingham Trent University, and Director of the International Gaming Research Unit. He has spent over two decades in the field is internationally known for his work into gaming and gambling. He has published over 250 refereed research papers, three books, 65 book chapters and over 1000 other articles. He has served on numerous national and international committees and gambling charities (e.g. National Chair of GamCare, Society for the Study of Gambling, Gamblers Anonymous General Services Board, National Council on Gambling). He has won ten national and international awards for his work including the John Rosecrance Prize (1994), CELEJ Prize (1998), Joseph Lister Prize (2004) and the US National Council on Problem Gambling Research Award (2009). He also does a lot of freelance journalism and has appeared on over 2000 radio and television programmes.